<PAGE>
Defined
Asset FundsSM
INDEX SERIES The Defined Fund consists of two separate Trusts,
S&P 500 TRUST 2 designated the S&P 500 Trust 2 (the 'S&P 500
S&P MIDCAP TRUST Trust') and the S&P MidCap Trust, which offer
EQUITY INCOME FUND investors the opportunity to purchase Units
UNIT INVESTMENT TRUSTS representing proportionate interests in defined
PROSPECTUS DATED portfolios of preselected securities consisting of
APRIL 22, 1994 substantially all of the common stocks, in
substantially the same proportions, which comprise
the Standard and Poor's 500 Stock Price Composite
Index and the Standard and Poor's MidCap 400
Index, respectively. The Fund is designed to
produce investment results that generally
correspond to the price and yield performance of
the common stocks represented by these Indices.
There can be no assurance that these objectives
will be met (see Risk Factors). The Fund is not
sponsored by or affiliated with Standard and
Poor's Corporation.
The value of Units in the Fund will fluctuate with
the value of the Portfolios of underlying
Securities and no assurance can be given that
dividends will be paid or that the Units will
appreciate in value.
Minimum purchase: 1,000 Units.
Minimum purchase for Individual Retirement/Keogh
Accounts: unrestricted.
-------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
SPONSORS: COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
Merrill Lynch, HAS THE COMMISSION OR ANY STATE SECURITIES
Pierce, Fenner & Smith Inc. COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
Smith Barney Shearson Inc. OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
PaineWebber Incorporated CONTRARY IS A CRIMINAL OFFENSE.
Prudential Securities -------------------------------------------------
Incorporated READ AND RETAIN THIS PROSPECTUS FOR FUTURE
Dean Witter Reynolds Inc. REFERENCE.
<PAGE>
DEFINED ASSET FUNDSSM is America's oldest and largest family of unit investment
trusts with over $90 billion sponsored since 1970. Each Defined Fund is a
portfolio of preselected securities. The portfolio is divided into 'units'
representing equal shares of the underlying assets. Each unit receives an equal
share of income and principal distributions.
With Defined Asset Funds you know in advance what you are investing in and that
changes in the portfolio are limited. Most defined bond funds pay interest
monthly and repay principal as bonds are called, redeemed, sold or as they
mature. Defined equity funds offer preselected stock portfolios with defined
termination dates.
Your financial advisor can help you select a Defined Fund to meet your personal
investment objectives. Our size and market presence enable us to offer a wide
variety of investments. Defined Funds are available in the following types of
securities: municipal bonds, corporate bonds, government bonds, utility stocks,
growth stocks, even international securities denominated in foreign currencies.
Termination dates are as short as one year or as long as 30 years. Special funds
are available for investors seeking extra features: insured funds, double and
triple tax-free funds, and funds with 'laddered maturities' to help protect
against rising interest rates. Defined Funds are offered by prospectus only.
- --------------------------------------------------------------------------------
CONTENTS
Investment Summary.......................................... A-3
S&P 500 TRUST 2
Accountants' Opinion Relating to the Fund................... D-1
Statement of Condition of the Fund.......................... D-2
Portfolio................................................... D-6
S&P MIDCAP TRUST
Accountants' Opinion Relating to the Fund................... D-16
Statement of Condition of the Fund.......................... D-17
Portfolio................................................... D-21
Fund Structure.............................................. 1
Risk Factors................................................ 1
Description of the Fund..................................... 3
Taxes....................................................... 8
Public Sale of Units........................................ 9
Market for Units............................................ 11
Redemption.................................................. 11
Expenses and Charges........................................ 12
Administration of the Fund.................................. 13
Resignation, Removal and Limitations on Liability........... 16
Miscellaneous............................................... 17
A-2
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND, INDEX SERIES
S&P 500 TRUST 2
S&P MIDCAP TRUST
INVESTMENT SUMMARY AS OF DECEMBER 31, 1993 (THE EVALUATION DATE)
S&P 500 TRUST
- ------------------------------------------------------------
NUMBER OF UNITS-- 55,320,109
FRACTIONAL UNDIVIDED INTEREST IN FUND REPRESENTED BY EACH
UNIT-- 1/55,320,109th
PUBLIC OFFERING PRICE PER 1,000 UNITS*
Trust Property+...........................................$ 61,242,485
----------------
Divided by Number of Units................................$ 1,107.06
(times 1,000)
Plus sales charge of 2.25% of Public Offering Price
(2.302% of net amount invested in Trust Property)**..... 25.48
----------------
Public Offering Price per 1,000 Units.....................$ 1,132.54
SPONSORS' REPURCHASE PRICE PER 1,000 UNITS AND REDEMPTION
PRICE PER 1,000 UNITS (based on Trust Property).........$ 1,107.06
($25.48 less***
than Public
Offering Price
per 1,000 Units)
TRUSTEE'S ANNUAL FEE AND EXPENSES
$2.16 per 1,000 Units (see Expenses and Charges)++
INCOME DISTRIBUTIONS
Distributions of income, if any, will be paid on the
25th day of each month (each a 'Distribution Day')
to Holders of record on the 10th day of that month
(each a 'Record Day').
EVALUATION TIME
4:00 P.M., New York Time
PORTFOLIO SUPERVISION FEE+++
Maximum of $.25 per 1,000 Units (see Expenses
and Charges).
MINIMUM VALUE OF TRUST
Trust Indenture may be terminated if the value of the
Trust is less than 40% of the value of the Securities
when deposited in the Portfolio. As of the Evalua-
tion Date the value of the Trust is 105% of the
value of the Securities when deposited in the Port-
folio.
MANDATORY TERMINATION DATE
February 28, 2017
LICENSOR
Standard & Poor's Corporation
S&P MIDCAP TRUST
- ------------------------------------------------------------
NUMBER OF UNITS-- 30,239,077
FRACTIONAL UNDIVIDED INTEREST IN FUND REPRESENTED BY EACH
UNIT-- 1/30,239,077th
PUBLIC OFFERING PRICE PER 1,000 UNITS*
Trust Property+...........................................$ 34,005,913
----------------
Divided by Number of Units................................$ 1,124.57
(times 1,000)
Plus sales charge of 2.25% of Public Offering Price
(2.302% of net amount invested in Trust Property)**..... 25.89
----------------
Public Offering Price per 1,000 Units.....................$ 1,150.46
SPONSORS' REPURCHASE PRICE PER 1,000 UNITS AND REDEMPTION
PRICE PER 1,000 UNITS (based on Trust Property) $ 1,124.57
($25.89 less***
than Public
Offering Price
per 1,000 Units)
TRUSTEE'S ANNUAL FEE AND EXPENSES
$3.45 per 1,000 Units (see Expenses and Charges)++
INCOME DISTRIBUTIONS
Distributions of income, if any, will be paid on the
25th day of each month (each a 'Distribution Day')
to Holders of record on the 10th day of that month
(each a 'Record Day').
EVALUATION TIME
4:00 P.M., New York Time
PORTFOLIO SUPERVISION FEE+++
Maximum of $.25 per 1,000 Units (see Expenses
and Charges).
MINIMUM VALUE OF TRUST
Trust Indenture may be terminated if the value of the
Trust is less than 40% of the value of the Securities
when deposited in the Portfolio. As of the Evaluation
Date the value of the Trust is 113% of the value of
the Securities when deposited in the Portfolio.
MANDATORY TERMINATION DATE
February 28, 2017
LICENSOR
Standard & Poor's Corporation
- ------------------
+ On the Initial Date of Deposit (February 19, 1992) the aggregate value
of Securities in each Trust was $2,000,000.00 and 2,046,035 Units of
each Trust were outstanding. Cost of Securities is set forth under
Portfolio.
++ Of this amount the Trustee receives annually for its services as
Trustee $0.84 per 1,000 Units (calculated monthly based on the largest
number of Units outstanding at anytime during that month) subject to
reduction as the size of the Fund increases. The Trustee's Annual Fee
and Expenses also includes the Portfolio Supervision Fee set forth
herein.
+++ The Sponsors also may be reimbursed for their costs of bookkeeping
and administrative services to the Fund. Portfolio supervision fees
deducted in excess of portfolio supervision expenses may be used for
this reimbursement. Additional deductions for this purpose are
currently estimated not to exceed an annual rate of $0.10 per 1,000
Units.
* These figures assume a purchase of 1,000 Units. The price of a single
Unit, or any multiple thereof, is calculated simply by dividing the
Public Offering Price per 1,000 Units, above, by 1,000, and multiplying
by the number of Units.
** The sales charge is a maximum of 2.25% of the Public Offering Price,
and is reduced in the case of purchases of $25,000 or more. See Public
Sale of Units--Public Offering Price. There is no sales charge for
purchases pursuant to the Reinvestment Plan.
*** For Units purchased or redeemed on the Evaluation Date, the amount in
the Income Account is approximately equal to the undistributed net
investment income of the Fund (see Statement of Condition on p. D-2)
divided by the number of outstanding Units, plus any amount per Unit
added to the Income Account to the expected date of settlement (5
business days after purchase or redemption). The amount of the cash
adjustment which is added is equal to the cash per Unit in the Capital
Account not allocated to the purchase of specific Securities (see
Public Sale of Units--Public Offering Price and Redemption).
A-3
<PAGE>
INVESTMENT SUMMARY AS OF THE EVALUATION DATE (CONTINUED)
OBJECTIVE OF THE TRUSTS--To provide investors with the opportunity to
purchase Units representing proportionate interests in a portfolio consisting of
substantially all of the common stocks, in substantially the same proportions,
which comprise the Standard & Poor's 500 Stock Price Composite Index (the 'S&P
500 Index') or the Standard & Poor's MidCap 400 Index (the 'S&P MidCap Index')
in order to produce investment results that generally correspond to the price
and yield performance of the S&P 500 Index and the S&P MidCap Index. There can
be no assurance that this objective will be met because it may be impracticable
for the Fund to duplicate or maintain precisely the relative weightings of the
common stocks which comprise the S&P 500 Index (the '500 Index Stocks') or the
S&P MidCap Index (the 'MidCap Index Stocks') or to purchase all of these stocks.
(See Fund Structure; Description of the Fund--The S&P 500 Index and The S&P
MidCap Index). The payment of dividends and preservation of capital are
dependent on several factors including the financial condition of the issuers of
the Securities in the Portfolios. The value of the underlying Portfolios and
therefore the value of the Units will fluctuate with changes in the values of
common stocks generally and other factors.
It is the Fund's investment policy to have at least 95% of a Trust's assets
invested in the common stocks comprising the S&P 500 Index and the S&P MidCap
Index, respectively. The Sponsors expect to maintain a correlation of between
.97-.99 between each Trust and the applicable Index.
FUND PORTFOLIOS--The Trusts consist of different issues of common stocks of
corporations selected in accordance with the selection and weightings of stocks
established by the S&P 500* Index and the S&P MidCap Index, respectively. The
S&P 500 Index is composed of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. The S&P MidCap Index is composed of 400
selected common stocks of which, as of the Evaluation Date, 273 were listed
either on the New York or the American Stock Exchange and 127 were quoted on the
NASDAQ National Market System. (See Description of the Fund--The S&P 500 Index
and The S&P MidCap Index.)
Investors often compare the performance of their equity investments to a
measure of overall market performance--an index. The Trusts are designed to
offer investors an opportunity, with a single, convenient purchase, to
participate in the total return performance of two indices broadly representing
the market. This diversification reduces the risk of selecting individual stocks
or market sectors. Indexing is a strategy that most equity investors can use as
part of their overall investment plan, to seek potential growth in otherwise
conservative portfolios or to hedge an aggressive strategy.
Since common stocks are purchased for the Fund only in round lots, and
because of certain procedural policies of the Fund, the Portfolios may never
precisely duplicate the percentage relationships established for stocks by the
S&P 500 Index and the S&P MidCap Index. For example, brokerage fees incurred in
purchasing Securities with cash deposited with instructions to purchase the
Securities will be an expense of a Trust, and price fluctuations from the time
moneys are received by a Trust and invested will affect the value of the Units,
the income per Unit received by the Trust and the correlations between the
Trusts and the Indices. (See Fund Structure; Administration of the
Fund--Portfolio Supervision.) Additional deposits or purchases of common stocks
in connection with creation of additional Units will be effected in a manner
that will maintain, to the extent practicable, the relative weightings among the
common stocks in the relevant Index.
RISK FACTORS--Investment in the Fund should be made with an understanding
that the value of the underlying Portfolios may fluctuate in accordance with
changes in the financial condition of the issuers of the Securities in the
Portfolios (particularly those that are heavily weighted in the relevant Index),
the value of common stocks generally and other factors. Also the identity and
weighting of the 500 Index Stocks and the MidCap Index Stocks will change from
time to time (see Description of the Fund--The S&P 500 Index and The S&P MidCap
Index). There can be no assurance that the issuers of the Securities will pay
dividends on outstanding shares of common stock. Distributions of income on the
underlying Securities will generally depend upon the declaration of dividends by
the issuers of the Securities
- ------------------------------------
*'S&P', 'Standard & Poor's', 'S&P 500', 'Standard Poor's 500', 'S&P MidCap
400 Index' and 'Standard & Poor's MidCap 400 Index' are trademarks of Standard &
Poor's Corporation.
A-4
<PAGE>
DEFINED ASSET FUNDS -
EQUITY INCOME FUND INDEX SERIES,
S&P 500 TRUST 2
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Trustee and Holders
of Defined Asset Funds -
Equity Income Fund Index Series,
S&P 500 Trust 2:
We have audited the accompanying statement of condition of Defined Asset Funds -
Equity Income Fund Index Series, S&P 500 Trust 2, including the portfolio, as
of
December 31, 1993 and the related statements of operations and of changes in
net
assets for the period February 20 to December 31, 1992 and the year ended
December 31, 1993. These financial statements are the responsibility of the
Trustee. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
Securities owned at December 31, 1993, as shown in such portfolio, were
confirmed to us by the Chase Manhattan Bank, N.A., the Trustee. An audit also
includes assessing the accounting principles used and significant estimates
made by the Trustee, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Defined Asset Funds - Equity
Income Fund Index Series, S&P 500 Trust 2 at December 31, 1993 and the results
of its operations and changes in its net assets for the above-stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE
New York, N.Y.
March 4, 1994
D-1
<PAGE>
<PAGE>
DEFINED ASSET FUNDS -
EQUITY INCOME FUND INDEX SERIES,
S&P 500 TRUST 2
STATEMENT OF CONDITION
AS OF DECEMBER 31, 1993
<TABLE>
<S> <C>
TRUST PROPERTY:
Investment in marketable securities - at value
(cost $56,301,138) (Note 1) $61,242,485
Dividend receivable 138,400
Cash 104,101
Due from Trustee 9,000
Proceeds receivable from securities sold 4,928
___________
Total trust property $61,498,914
___________
___________
NET ASSETS, REPRESENTED BY:
55,320,109 units of fractional
undivided interest outstanding (Note 3) $61,482,870
Undistributed net investment income 16,044 $61,498,914
___________ ___________
___________
UNIT VALUE ($61,498,914 / 55,320,109 units) $1.11169
________
________
</TABLE>
See Notes to Financial Statements.
D-2
<PAGE>
<PAGE>
DEFINED ASSET FUNDS -
EQUITY INCOME FUND INDEX SERIES,
S&P 500 TRUST 2
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
February 20
to Year Ended
December 31,December 31,
1992 1993
<S> <C> <C>
INVESTMENT INCOME:
Dividend income $ 560,493 $1,418,147
Trustee's fees and expenses (25,412) (96,992)
Sponsors' fees (4,936) (11,785)
__________ __________
Net investment income 530,145 1,309,370
__________ __________
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain (loss) on securities sold or redeemed (1,655) 81,902
Unrealized appreciation of investments 1,644,974 3,296,373
__________ __________
Net realized and unrealized gain on investments 1,643,319 3,378,275
__________ __________
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS. $2,173,464 $4,687,645
__________ __________
__________ __________
</TABLE>
See Notes to Financial Statements.
D-3
<PAGE>
<PAGE>
DEFINED ASSET FUNDS -
EQUITY INCOME FUND INDEX SERIES,
S&P 500 TRUST 2
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
February 20
to Year Ended
December 31, December 31,
1992 1993
<S> <C> <C>
OPERATIONS:
Net investment income $ 530,145 $ 1,309,370
Realized gain (loss) on securities sold or redeemed (1,655) 81,902
Unrealized appreciation of investments 1,644,974 3,296,373
___________ ___________
Net increase in net assets resulting from operations 2,173,464 4,687,645
___________ ___________
DISTRIBUTIONS TO HOLDERS (Note 2):
Income (531,387) (1,340,429)
Principal (38,724)
___________ ___________
Total distributions (531,387) (1,379,153)
___________ ___________
CAPITAL SHARE TRANSACTIONS - Issuance of 30,130,178
and 23,143,896 units, respectively (Note 4) 29,800,000 24,748,345
___________ ___________
NET INCREASE IN NET ASSETS 31,442,077 28,056,837
NET ASSETS AT BEGINNING OF PERIOD 2,000,000 33,442,077
___________ ___________
NET ASSETS AT END OF PERIOD $33,442,077 $61,498,914
___________ ___________
___________ ___________
PER UNIT:
Income distributions during period $0.02372 $0.02719
________ ________
________ ________
Principal distributions during period $.00070
_______
_______
Net asset value at end of period $1.03934 $1.11169
________ ________
________ ________
TRUST UNITS OUTSTANDING AT END OF PERIOD 32,176,213 55,320,109
__________ __________
__________ __________
</TABLE>
See Notes to Financial Statements.
D-4
<PAGE>
DEFINED ASSET FUNDS -
EQUITY INCOME FUND INDEX SERIES,
S&P 500 TRUST 2
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a Unit
Investment Trust. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
(a) Securities are stated at market value; for securities listed on a national
securities exchange, value is based on the closing sale price on such exchange
and for securities not so listed, value is based on the current bid price on
the over-the-counter market. Realized gains or losses on sales of securities
are determined using the first-in, first-out cost method.
(b) The Fund is not subject to income taxes. Accordingly, no provision for
such taxes is required.
(c) Dividend income is recorded on the ex-dividend date.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders on the
twenty-fifth day of each month. Receipts other than dividends, after
deductions for redemptions and applicable expenses, are distributed as
explained in "Administration of the Fund" in this Prospectus, Part B.
3. NET CAPITAL
Cost of 55,320,109 units at Dates of Deposit $57,800,630
Less sales charge 1,300,630
___________
Net amount applicable to Holders 56,500,000
Realized gain on securities sold or redeemed 80,247
Principal distributions (38,724)
Net unrealized appreciation of investments 4,941,347
___________
Net capital applicable to Holders $61,482,870
___________
___________
4. REDEMPTIONS
Holders may request redemptions of units by presentation thereof to the
Trustee, Chase Manhattan Bank, N.A.
5. INCOME TAXES
As of December 31, 1993, net unrealized appreciation of investments, based
on cost for Federal income tax purposes, aggregated $4,941,347 of which
$7,191,181 related to appreciated securities and $2,249,834 related to
depreciated securities. The aggregate cost of investment securities for
Federal income tax purposes was $56,301,138 at December 31, 1993.
D-5
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
1 General Electric Co. 15,800 $ 1,306,990 $ 1,657,026 2.7057%
2 Exxon Corp. 23,100 1,421,080 1,455,301 2.3763
3 American Tel. & Tel. 25,100 1,215,492 1,317,750 2.1517
4 Coca-Cola 24,100 94,370 1,075,464 1.7561
5 Wallmart Stores 42,700 1,218,095 1,067,501 1.7431
6 Royal Dutch Petroleum 10,000 856,875 1,043,750 1.7043
7 Phillip Morris 16,300 1,158,878 908,725 1.4838
8 Merck & Co., Inc. 23,800 1,019,565 818,126 1.3359
9 General Motors Corp. 13,200 509,147 724,351 1.1828
10 Proctor and Gamble 12,700 644,215 723,901 1.1820
11 GTE Corp. 17,500 594,675 612,500 1.0001
12 Dupont (E.I.) De Nemours 12,600 613,730 607,951 0.9927
13 IBM 10,700 748,935 604,550 0.9871
14 Pepsico Inc. 14,700 551,898 600,864 0.9811
15 Ford 9,200 418,385 593,401 0.9689
16 Mobil Corp. 7,400 483,958 584,600 0.9546
17 Bristol Myers Squibb 9,600 641,130 558,000 0.9111
18 Johnson & Johnson 12,100 561,665 541,476 0.8842
19 Bell South Corp. 9,200 473,197 532,450 0.8694
20 Chevron Corp. 6,000 435,900 522,750 0.8536
21 American Int'l Group, In. 5,900 421,242 517,725 0.8454
22 AMOCO Corp. 9,200 466,372 486,450 0.7943
23 Intel Corp. 7,800 319,112 483,601 0.7896
24 Bell Atlantic Corp. 8,100 400,305 477,900 0.7803
25 Motorola Inc. 5,000 270,620 461,875 0.7542
26 Southwestern Bell Corp. 11,100 379,060 460,651 0.7522
27 Abbot Laboratories 15,400 449,867 454,300 0.7418
28 Minnesota Mining & Mfg. 4,000 401,300 435,000 0.7103
29 Walt Disney Co. 9,900 394,065 421,988 0.6890
30 Pacific Telesis Group 7,700 341,547 415,801 0.6789
31 Pfizer, Inc. 5,900 415,258 407,100 0.6647
32 Federal Nat'l Mortg Assn. 5,100 361,942 400,351 0.6537
33 Ameritech 5,100 352,852 391,425 0.6391
34 McDonald's Corp. 6,600 307,718 376,200 0.6143
35 US West Inc. 8,200 323,573 376,176 0.6142
36 American Home Products 5,800 403,215 375,550 0.6132
37 Hewlett Packard Co. 4,700 334,510 371,300 0.6063
38 Unilever 3,000 318,275 346,501 0.5658
39 Chrysler 6,500 206,787 346,125 0.5652
40 Sears Roebuck 6,500 197,781 342,871 0.5599
41 Eastman Kodak 6,100 211,841 341,600 0.5578
42 Home Depot Inc. 8,300 333,775 327,850 0.5353
43 Eli Lily & Co. 5,400 332,845 320,626 0.5235
44 Atlantic Richfield 3,000 337,012 315,750 0.5156
45 Texaco Inc. 4,800 297,065 310,201 0.5065
46 Time Warner Inc. 7,000 213,095 309,750 0.5058
47 Nynex Corp. 7,700 313,418 308,964 0.5045
48 Bankamerica Corp. 6,640 303,272 307,930 0.5028
49 Dow Chemicals 5,100 289,855 289,426 0.4726
50 MCI Communications 10,000 197,988 282,500 0.4613
51 Pacific Gas & Electric 8,000 260,038 281,000 0.4588
</TABLE>
D-6
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
52 American Express 9,000 $ 222,737 $ 277,876 0.4537%
53 Boeing Co. Com. 6,300 249,715 272,476 0.4449
54 Schlumberger Ltd. 4,500 276,963 266,063 0.4344
55 Southern Co. 5,900 219,820 260,338 0.4251
56 Citicorp. 7,000 158,537 257,251 0.4201
57 Tele Communications Inc. 8,400 175,475 254,100 0.4149
58 Emerson Electric Co. 4,200 227,722 253,050 0.4132
59 Morgan J.P. 3,600 224,805 249,750 0.4078
60 Banc One Corp. 6,375 256,222 249,423 0.4073
61 Schering Plough 3,600 215,155 246,600 0.4027
62 Anheuser-Busch 5,000 272,700 245,625 0.4011
63 Nations Bank 5,000 245,000 245,000 0.4000
64 Gillette Co. 4,100 218,667 244,463 0.3992
65 Kellogg Co. 4,300 265,090 244,026 0.3985
66 Union Pacific 3,800 211,653 237,976 0.3886
67 WMX Technologies 8,900 327,858 234,738 0.3833
68 Penny J.C. Co. Inc. 4,400 166,230 230,450 0.3763
69 Sara Lee Corp. 9,000 242,820 225,000 0.3674
70 Toys R Us 5,400 198,458 220,725 0.3604
71 Sprint 6,300 176,103 218,925 0.3575
72 Allied-Signal Inc. 2,600 153,067 205,400 0.3354
73 Dun & Bradstreet 3,300 188,677 203,364 0.3321
74 ITT Corp. 2,200 157,423 200,750 0.3278
75 Campbell Soup 4,700 183,135 192,700 0.3147
76 McCaw Cellular 3,800 174,900 191,900 0.3133
77 Chemical Banking Corp. 4,700 174,897 188,589 0.3079
78 Capital Cities ABC Inc. 300 139,640 185,850 0.3035
79 Norfolk Southern Corp. 2,600 160,430 183,300 0.2993
80 General Mills Com. w/rights 3,000 199,362 182,250 0.2976
81 May Department Stores 4,600 153,950 181,126 0.2958
82 Colgate Palmolive 2,900 159,270 180,888 0.2954
83 Seagram Ltd. 6,900 192,920 180,263 0.2943
84 Texas Utilities Company 4,100 173,330 177,326 0.2895
85 General Re. Corp. 1,600 166,555 171,200 0.2795
86 Xerox 1,900 145,858 169,813 0.2773
87 Weyerhaeuser 3,800 143,815 169,575 0.2769
88 Caterpillar Inc. 1,900 110,482 169,100 0.2761
89 Warner Lambert Co. 2,500 166,375 168,750 0.2755
90 Heinz H J 4,700 183,972 168,614 0.2753
91 Primerica Corp. 4,333 116,861 168,446 0.2750
92 Merrill Lynch Co. 4,000 127,000 168,000 0.2743
93 SCE Corp. Holding Corp. 8,300 185,843 166,000 0.2711
94 Raytheon 2,500 123,890 165,000 0.2694
95 Federal Home Loan 3,300 148,070 164,589 0.2687
96 Tenneco, Inc. 3,100 132,893 163,138 0.2664
97 Monsanto Co. 2,200 130,048 161,425 0.2636
98 Duke Power Co. 3,800 137,690 161,025 0.2629
99 KMART 7,500 182,295 159,375 0.2602
100 Int'l Paper 2,300 155,652 155,825 0.2544
101 Kimberly Clark Corp. 3,000 162,663 155,625 0.2541
102 Gannett Co. 2,700 132,285 154,575 0.2524
</TABLE> D-7
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
103 CSX Corporation 1,900 $ 127,508 $ 153,900 0.2513%
104 Oracle Systems Corp. 5,300 72,450 152,375 0.2488
105 Rockwell Int'l 4,100 114,030 152,213 0.2485
106 PPG Ind. 2,000 128,913 151,750 0.2478
107 American Barrick Resource 5,300 148,090 151,050 0.2466
108 Pub. Serv. Enterprise Gr. 4,500 134,638 144,000 0.2351
109 Automatic Data Processing 2,600 126,092 143,650 0.2346
110 Archer-Daniels-Midland 6,290 150,720 143,109 0.2337
111 United Technologies Corp. 2,300 117,090 142,600 0.2328
112 Northern Telecom Ltd. 4,600 179,343 142,025 0.2319
113 Dominion Resources Corp. 3,100 124,555 140,664 0.2297
114 Phillips Petroleum 4,800 127,028 139,200 0.2273
115 Consolidated Edison 4,300 134,352 138,138 0.2256
116 FPL Group 3,500 127,188 136,939 0.2236
117 CPC Int'l Inc. 2,800 125,875 133,350 0.2177
118 Norwest Corp. 5,400 115,825 131,625 0.2149
119 Wells Fargo & Co. 1,000 85,650 129,375 0.2113
120 Blockbuster Entertainment 4,200 79,597 128,626 0.2100
121 Goodyear Tire & Rubber 2,800 100,972 128,100 0.2092
122 First Union Corp. 3,100 131,492 127,876 0.2088
123 Enron Corp. 4,400 106,177 127,600 0.2084
124 Aetna Life & Casualty 2,100 99,617 126,788 0.2070
125 AMP Inc. 2,000 119,000 126,250 0.2061
126 American Electric Power 3,400 113,232 126,225 0.2061
127 Albertsons Inc. 4,700 110,387 125,726 0.2053
128 Unocal Corp. 4,500 116,000 125,438 0.2048
129 PNC FInancial 4,300 119,948 124,700 0.2036
130 Chubb Corp. 1,600 126,992 124,600 0.2035
131 Baxter Int'l, Inc. 5,100 159,395 124,313 0.2030
132 Philadelphia Electric Co. 4,100 110,580 124,025 0.2025
133 Computer Assoc. Int'l. 3,100 61,992 124,000 0.2025
134 Amgen Inc. 2,500 140,650 123,750 0.2021
135 American Brands 3,700 151,585 123,025 0.2009
136 Conagra Inc. 4,600 129,180 121,325 0.1981
137 Novell Corp. 5,800 161,775 120,350 0.1965
138 Pitney Bowes 2,900 106,488 119,988 0.1959
139 Entergy Corp. 3,300 105,040 118,800 0.1940
140 Bankers Trust of NY 1,500 97,475 118,688 0.1938
141 Deere & Co. 1,600 84,092 118,400 0.1933
142 Georgia-Pacific Corp. 1,700 107,810 116,875 0.1908
143 Chase Manhattan 3,400 98,382 115,176 0.1881
144 Limited Inc. 6,700 166,085 114,738 0.1874
145 American General 4,000 103,900 114,500 0.1870
146 Houston Industry Inc. 2,400 107,420 114,300 0.1866
147 Marsh & Mclennan Cos. Inc. 1,400 118,220 113,750 0.1857
148 Commonwealth Edison 4,000 114,612 113,000 0.1845
149 Compaq Computer 1,500 58,987 111,000 0.1812
150 Aluminum Co. of America 1,600 112,030 111,000 0.1812
151 Placer Dome Inc. 4,400 58,108 109,450 0.1787
152 Dean Witter Disc Corp 3,141 139,195 108,759 0.1776
153 Texas Instruments 1,700 84,060 107,950 0.1763
D-8
</TABLE>
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
154 Wachovia Corp 3,200 $ 123,885 $ 107,200 0.1750%
155 The Gap Inc. 2,700 97,398 106,313 0.1736
156 Central & Southwest Corp. 3,500 101,795 105,876 0.1729
157 UST Inc. 3,800 113,003 105,450 0.1722
158 Marriott International Inc. 3,600 76,622 104,400 0.1705
159 Rubbermaid Inc. 3,000 96,138 104,250 0.1702
160 Masco Corp. 2,800 81,928 103,600 0.1692
161 Corning Inc. 3,700 128,960 103,600 0.1692
162 Suntrust Bks. Inc. 2,300 95,065 103,500 0.1690
163 Cooper-Industries Inc. 2,100 106,655 103,425 0.1689
164 Burlington Resources 2,400 110,520 101,700 0.1661
165 Conrail Inc. 1,500 71,960 100,314 0.1638
166 Pacificorp 5,200 107,098 100,100 0.1634
167 Saloman Inc. 2,100 75,830 100,013 0.1633
168 Sysco Corp. 3,400 85,165 99,450 0.1624
169 Burlington Northern 1,700 76,197 98,389 0.1607
170 Comcast Corp. Cl. A 2,700 89,775 97,200 0.1587
171 Wrigley Wm. Jr. Co. 2,200 68,168 97,075 0.1585
172 Great Lakes Chemicals 1,300 86,565 97,013 0.1584
173 Occidental Petroleum 5,600 109,055 95,900 0.1566
174 Walgreen Co. 2,300 87,915 94,013 0.1535
175 AMR Corp. 1,400 92,482 93,800 0.1532
176 Upjohn Corp. 3,200 105,473 93,200 0.1522
177 Textron Inc. 1,600 66,168 93,200 0.1522
178 CNA Financial 1,200 107,435 93,000 0.1519
179 Air Products & Chemicals 2,100 92,862 92,926 0.1517
180 Columbia Health Care Corp 2,792 61,218 92,834 0.1516
181 Quaker Oats Co. 1,300 81,453 92,300 0.1507
182 Westinghouse Electric 6,500 103,263 91,813 0.1499
183 Hercules 800 49,465 90,400 0.1476
184 Carolina Power & Light 3,000 84,150 90,376 0.1476
185 Medtronic Inc. 1,100 87,743 90,338 0.1475
186 Donnelley RR & Sons 2,900 82,177 90,263 0.1474
187 First Interstate Bancorp 1,400 65,032 89,775 0.1466
188 Promus Corp. 1,950 34,865 89,213 0.1457
189 NBD Bancorp. Inc. 3,000 91,513 88,500 0.1445
190 Genuine Parts Co. 2,350 78,747 88,419 0.1444
191 Marathon Group 5,300 103,815 87,450 0.1428
192 Dayton Hudson 1,300 92,427 86,775 0.1417
193 CBS Inc. 300 59,340 86,550 0.1413
194 Whirlpool Corp. 1,300 60,478 86,450 0.1412
195 Digital Equipment 2,500 107,337 85,626 0.1398
196 Honeywell Inc. 2,500 86,085 85,625 0.1398
197 American Cyanamid Co. 1,700 96,160 85,425 0.1395
198 Transamerica Corp. 1,500 69,663 85,125 0.1390
199 Alcan Aluminum 4,100 79,055 85,075 0.1389
200 Nucor Corp. 1,600 52,960 84,800 0.1385
201 Morton Int'l Inc. 900 57,583 84,150 0.1374
202 Travelers Corp. 2,700 69,010 84,038 0.1372
203 Fleet Financial Group 2,500 77,712 83,438 0.1362
204 Hershey Foods Corp. 1,700 78,297 83,300 0.1360
</TABLE> D-9
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
205 TRW Inc. 1,200 $ 66,835 $ 83,100 0.1357%
206 Lowe's Cos. Inc. 1,400 36,798 82,950 0.1354
207 Louisiana Pacific 2,000 55,500 82,500 0.1347
208 Browning Ferris Ind. 3,200 77,860 82,400 0.1345
209 Illinois Tool Wks. Inc. 2,100 71,185 81,900 0.1337
210 Lockheed Corp. 1,200 63,960 81,900 0.1337
211 CIGNA Corp. 1,300 74,615 81,575 0.1332
212 Block H & R Inc. 2,000 71,512 81,500 0.1331
213 Melville Corp. 2,000 96,888 81,250 0.1327
214 Detroit Edison 2,700 89,710 81,000 0.1323
215 Martin Marietta Corp. 1,800 57,300 80,100 0.1308
216 The Times Mirror Co. 2,400 79,570 80,100 0.1308
217 Consolidated Natural Gas 1,700 75,260 79,900 0.1305
218 Dillard Department Stores 2,100 86,935 79,800 0.1303
219 Int'l Flavors & Fragrance 700 75,947 79,625 0.1300
220 Rohm & Haas Co. 1,300 70,615 77,350 0.1263
221 Price/Costco 4,004 71,963 77,077 0.1259
222 Amerada Hess Corp. 1,700 79,697 76,713 0.1253
223 Ingersoll-Rand Co. 2,000 63,772 76,500 0.1249
224 Sante Fe Southern Pacific 3,400 47,070 75,650 0.1235
225 Ralston-Ralston Purina Co. 1,900 91,120 75,525 0.1233
226 Winn Dixie Stores 1,400 79,708 75,075 0.1226
227 Newmont Mining 1,300 58,815 74,913 0.1223
228 McDonnell Douglas 700 39,323 74,900 0.1223
229 Barnett Banks of Florida 1,800 72,090 74,700 0.1220
230 Union Electric 1,900 69,908 74,575 0.1218
231 Lincoln National Corp. 1,700 58,408 73,950 0.1207
232 UAL Corp. 500 64,025 73,000 0.1192
233 Tribune Co. 1,200 57,673 72,150 0.1178
234 St. Paul Cos. Inc. 800 61,778 71,900 0.1174
235 Federal Express 1,000 48,412 70,875 0.1157
236 Capital Holding Corp. 1,900 64,297 70,539 0.1152
237 Grace (W.R.) 1,700 65,097 69,063 0.1128
238 Baltimore Gas & Electric 2,700 63,162 68,514 0.1119
239 First Fidelity Banc Corp. 1,500 61,475 68,250 0.1114
240 Mattel Inc. 2,450 61,040 67,682 0.1105
241 Crown Cork & Seal Inc. 1,600 55,835 67,000 0.1094
242 Halliburton Co. 2,100 66,305 66,938 0.1093
243 Dover Corp. 1,100 49,967 66,826 0.1091
244 Pioneer Hi-Bred Intl 1,700 62,375 66,300 0.1083
245 Safeco Corp. 1,200 64,938 66,000 0.1078
246 Eaton Corp. 1,300 52,072 65,650 0.1072
247 Nike Inc. 1,400 99,195 64,925 0.1060
248 First Chicago 1,500 54,525 64,875 0.1059
249 Cypress Minerals 2,500 57,002 64,689 0.1056
250 Dow Jones 1,800 55,602 64,350 0.1051
251 Ohio Edison Co. 2,800 62,140 63,700 0.1040
252 Mellon Bank Corp. 1,200 59,260 63,600 0.1038
253 Syntex Corp. 4,000 121,275 63,500 0.1037
254 MBNA Corp. 1,900 44,835 63,413 0.1035
255 Phelps Dodge Corp. 1,300 59,105 63,375 0.1035
D-10
</TABLE>
<PAGE>
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
256 Avon Prods. Inc. 1,300 $ 69,540 $ 63,213 0.1032%
257 Torchmark Corp. 1,400 68,235 63,000 0.1029
258 Union Carbide Corp. 2,800 55,003 62,650 0.1023
259 Union Camp Corp. 1,300 61,278 61,913 0.1011
260 DSC Communications 1,000 26,675 61,500 0.1004
261 Apple Computer Inc. 2,100 114,875 61,425 0.1003
262 Woolworth 2,400 70,658 60,900 0.0994
263 McGraw-Hill Inc. 900 55,645 60,863 0.0994
264 Fluor Corp. 1,500 62,712 60,750 0.0992
265 Newell 1,500 59,838 60,563 0.0989
266 Hasbro Inc. 1,650 50,780 59,813 0.0977
267 Knight-Ridder Inc. 1,000 59,313 59,750 0.0976
268 Tandy Corp. 1,200 35,048 59,400 0.0970
269 Sun Co. 2,000 54,600 58,750 0.0959
270 Scott Paper Co. 1,400 53,645 57,575 0.0940
271 Grainger W.W. 1,000 55,175 57,500 0.0939
272 Corestates Financial Corp. 2,200 56,650 57,475 0.0938
273 Sherwin Williams 1,600 47,980 57,200 0.0934
274 Boatmens Bancshares 1,900 49,800 56,763 0.0927
275 Champion Int'l. 1,700 48,935 56,738 0.0926
276 Loral Corp. 1,500 33,853 56,625 0.0925
277 USX-US Steel Group 1,300 40,865 56,388 0.0921
278 Bausch & Lomb Inc. 1,100 56,780 56,375 0.0921
279 American Stores 1,300 50,140 55,900 0.0913
280 Household Int'l. 1,700 49,520 55,463 0.0906
281 General Dynamics 600 49,955 55,350 0.0904
282 V F Corp. 1,200 57,110 55,350 0.0904
283 Sun Microsystems Inc. 1,900 56,175 55,338 0.0904
284 Homestake Mining Co. 2,500 34,275 55,000 0.0898
285 Alco Standard 1,000 41,650 54,750 0.0894
286 Hilton Hotel Corp. 900 41,145 54,675 0.0893
287 Deluxe Check Printers 1,500 64,362 54,375 0.0888
288 Clorox Co. 1,000 47,275 54,250 0.0886
289 Dana Corp. 900 39,757 53,888 0.0880
290 INCO Ltd. 2,000 50,862 53,750 0.0878
291 Coastal Corp. 1,900 49,070 53,438 0.0873
292 Niagara Mohawk Power Co. 2,600 52,605 52,650 0.0860
293 Baker Hughes Inc. 2,600 56,380 52,000 0.0849
294 Panhandle Eastern Corp. 2,200 41,923 51,975 0.0849
295 Dresser Industries Inc. 2,500 47,223 51,875 0.0847
296 Northern Sts. Power Minn. 1,200 51,810 51,750 0.0845
297 Litton Indus. Inc. 800 40,010 51,500 0.0841
298 Harcourt General 1,400 41,270 50,750 0.0829
299 Temple Inland Inc. 1,000 49,225 50,375 0.0823
300 Becton, Dickinson 1,400 51,145 50,225 0.0820
301 Reynolds Metals 1,100 58,868 49,913 0.0815
302 New York Times Cl. A 1,900 52,408 49,875 0.0814
303 Nordstrom 1,500 51,175 49,500 0.0808
304 Mead Corp. 1,100 43,393 49,500 0.0808
305 Delta Airlines 900 50,407 49,163 0.0803
306 Nalco Chemical 1,300 44,703 48,750 0.0796
</TABLE> D-11
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
307 Premark Int'l 600 $ 28,130 $ 48,150 0.0786%
308 Great Western Financial 2,400 41,120 48,000 0.0784
309 Reebok Int'l Ltd. 1,600 50,568 48,000 0.0784
310 Penzoil Co. 900 47,508 47,925 0.0783
311 American Greetings Cl. A 1,400 33,562 47,600 0.0777
312 Super Valu Stores, Inc. 1,300 38,740 47,125 0.0769
313 Imcera 1,400 45,407 47,075 0.0769
314 Golden West Financial 1,200 50,560 46,800 0.0764
315 Tyco Labs. Inc. 900 35,495 46,463 0.0759
316 Williams Cos. 1,900 39,150 46,313 0.0756
317 Sonat Inc. 1,600 36,115 46,200 0.0754
318 US Bancorp 1,800 43,438 45,000 0.0735
319 Interpublic Group 1,400 45,495 44,800 0.0732
320 Jefferson-Pilot Corp. 950 41,145 44,532 0.0727
321 Borden Inc. 2,600 71,992 44,200 0.0722
322 Lotus Development 800 23,300 44,000 0.0718
323 Englehard Corp. 1,800 37,987 43,875 0.0716
324 Bank of Boston 1,900 43,245 43,700 0.0714
325 Brown-Forman Distillers Co. 500 39,537 43,625 0.0712
326 McKesson 800 32,378 43,200 0.0705
327 Westvaco Corp. 1,200 43,198 42,750 0.0698
328 Johnson Controls 800 35,327 42,500 0.0694
329 Roadway Services 700 46,225 42,000 0.0686
330 National Medical Ent. 3,000 37,338 42,000 0.0686
331 Ahmanson (H.F.) & Co. 2,100 36,905 41,213 0.0673
332 TJX Cos. Common 1,400 34,595 40,775 0.0666
333 Services Corp. Int'l 1,550 29,695 40,688 0.0664
334 Kerr-Mcgee 900 39,382 40,613 0.0663
335 Kroger Co. 2,000 33,413 40,250 0.0657
336 Praxair Inc. Com. 2,400 26,155 39,900 0.0652
337 Pall Corp. 2,133 42,090 39,200 0.0640
338 Alza Corp. Cl. N 1,400 53,082 39,200 0.0640
339 Beneficial Corp. 1,000 32,937 38,250 0.0625
340 Unisys Corp. 3,000 31,950 37,875 0.0618
341 Cummins Engine Inc. 700 26,607 37,625 0.0614
342 Ashland Oil 1,100 31,417 37,538 0.0613
343 Cooper Tire & Rubber 1,500 43,922 37,500 0.0612
344 Armstrong World Ind. Inc. 700 22,772 37,275 0.0609
345 Ryder Sys. Inc. 1,400 28,215 37,100 0.0606
346 Shawmut National Corp. 1,700 30,585 36,975 0.0604
347 Circuit City Stores 1,700 35,637 36,975 0.0604
348 Gerber Corp. 1,300 41,312 36,888 0.0602
349 Ethyl Corp. 2,100 57,717 36,750 0.0600
350 Paccar Inc. 600 34,450 36,750 0.0600
351 Echlin Inc. 1,100 24,267 36,575 0.0597
352 Dial Corp. 900 36,632 36,338 0.0593
353 Maytag Co. 2,000 32,338 36,000 0.0588
354 Pacific Enterprises 1,500 31,550 35,625 0.0582
355 Stanley Works 800 33,428 35,600 0.0581
356 Owens Corning Fiberglass 800 30,340 35,500 0.0580
357 Moore Ltd. 1,800 32,428 34,425 0.0562
D-12
</TABLE>
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
358 Liz Claiborne, Inc. 1,500 $ 55,788 $ 34,125 0.0557%
359 Parker-Hannifin 900 28,795 33,975 0.0555
360 Worthington Ind. 1,650 27,650 33,825 0.0552
361 Northrop Corp. 900 26,845 33,638 0.0549
362 Pet 1,900 33,595 33,250 0.0543
363 FMC Corp. 700 32,398 32,988 0.0539
364 Bethlehem Steel 1,600 25,055 32,600 0.0532
365 Whitman Corp. 2,000 28,638 32,500 0.0531
366 Avery Dennison Corp. 1,100 29,980 32,313 0.0528
367 National Semiconductor 2,000 24,463 32,250 0.0527
368 Harris Corp. Del 700 22,797 31,850 0.0520
369 Varity Corp. 700 18,785 31,325 0.0511
370 Wendy's Int'l 1,800 23,578 31,275 0.0511
371 Oryx Energy Co. 1,800 38,990 31,050 0.0507
372 General Signal Corp. 900 28,362 30,938 0.0505
373 Perkin Elmer 800 27,178 30,800 0.0503
374 Brunswick Corp. 1,700 26,047 30,600 0.0500
375 Polaroid Corp. 900 27,233 30,375 0.0496
376 Snap-on-Tools 800 28,090 30,300 0.0495
377 Navistar Int'l Corp. 1,280 33,073 30,240 0.0494
378 Raychem Corp. 800 30,253 30,000 0.0490
379 Computer Sciences Corp. 300 21,190 29,850 0.0487
380 Black & Decker 1,500 31,800 29,625 0.0484
381 Pep Boys-Manny, Moe & Jac. 1,100 25,593 28,875 0.0471
382 James River Corp. (Va.) 1,500 29,787 28,875 0.0471
383 Advanced Micro Devices 1,600 30,655 28,400 0.0464
384 Giant Food, Inc. 1,100 24,392 28,325 0.0463
385 Nicor Inc. 1,000 23,518 28,000 0.0457
386 Continental Corp. 1,000 27,937 27,625 0.0451
387 Allergan 1,200 28,485 27,150 0.0443
388 Ecolab Inc. 600 22,330 27,000 0.0441
389 King World Productions 700 20,823 26,863 0.0439
390 PSI Holdings, Inc. 1,000 19,463 26,500 0.0433
391 Inland Stl. Inds. Inc. 800 20,340 26,500 0.0433
392 McDermott Int'l. 1,000 23,763 26,500 0.0433
393 E Systems 600 22,817 26,025 0.0425
394 Teledyne Inc. 1,000 21,750 26,000 0.0425
395 Echo Bay Mines 2,000 14,556 25,750 0.0420
396 Manor Care Inc. 1,050 21,288 25,594 0.0418
397 Rite Aid Corp. 1,600 33,055 25,400 0.0415
398 Mercantile Stores Inc. 700 24,098 25,375 0.0414
399 Centex Corp. 600 17,762 25,200 0.0411
400 Briggs & Stratton 300 16,690 24,750 0.0404
401 Louisiana Ld Expl Co. 600 22,618 24,075 0.0393
402 St Jude Medical 900 33,625 23,850 0.0389
403 Grumman Corp. 600 15,342 23,700 0.0387
404 Potlatch Corp. 500 22,775 23,563 0.0385
405 Foster Wheeler Corp. 700 20,022 23,450 0.0383
406 Thomas & Betts Corp. 400 26,108 23,400 0.0382
407 National Service Inds. Inc. 900 23,195 23,063 0.0377
408 Bard C.R. Inc. 900 25,820 22,725 0.0371
</TABLE> D-13
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
409 Charming Shoppes Inc. 1,900 $ 29,450 $ 22,563 0.0368%
410 US Surgical Corp. 1,000 72,925 22,500 0.0367
411 USF and G 1,500 19,675 22,125 0.0361
412 Tandem Computers Inc. 2,000 25,438 21,750 0.0355
413 Biomet Inc. 2,100 34,063 21,525 0.0351
414 Scientific Atlanta 650 13,250 21,450 0.0350
415 Bemis 900 21,827 21,263 0.0347
416 Pittston Services Group 700 10,798 20,213 0.0330
417 The Timken Co. 600 16,955 20,175 0.0329
418 Columbia Gas System, Inc. 900 17,907 20,138 0.0329
419 Goodrich B.F. Co. 500 23,000 20,125 0.0329
420 Millipore Corp. 500 16,175 20,000 0.0327
421 Beverly Enterprises 1,500 16,237 19,875 0.0325
422 Russell Corp. 700 23,610 19,775 0.0323
423 Enserch Corp. 1,200 18,760 19,500 0.0318
424 Fleetwood Enterprises 800 16,250 19,000 0.0310
425 Great Atlantic & Pacific 700 19,560 18,900 0.0309
426 EG&G 1,000 22,583 18,375 0.0300
427 People's Energy Corp. 600 17,218 18,300 0.0299
428 Ogden Corp. 800 17,378 18,200 0.0297
429 PHM Corp. 500 14,113 18,125 0.0296
430 Autodesk 400 16,025 18,000 0.0294
431 Fleming Cos. 700 22,310 17,325 0.0283
432 Arkla Inc. 2,100 19,105 16,539 0.0270
433 Boise Cascade Corp. 700 15,260 16,450 0.0269
434 Safety Kleen 1,000 25,100 16,250 0.0265
435 Shoney's Inc. 700 15,335 16,188 0.0264
436 Asarco Inc. 700 18,210 16,013 0.0261
437 Jostens Inc. 800 22,015 15,800 0.0258
438 Clark Equipment Co. 300 6,515 15,712 0.0257
439 Trinova Corp. 500 12,413 15,688 0.0256
440 Giddings & Lewis Inc. 600 14,175 15,450 0.0252
441 US Life Corp. 400 13,278 15,350 0.0251
442 Ceridian Corp. 800 11,827 15,200 0.0248
443 Ball Corp. 500 15,545 15,125 0.0247
444 Morrison Knudson 600 13,188 15,075 0.0246
445 Federal Paper Board 700 19,547 14,875 0.0243
446 Stride Rite 900 19,533 14,738 0.0241
447 Kaufman & Broad Home Corp. 600 10,217 14,250 0.0233
448 Consolidated Freightways 600 9,817 14,175 0.0231
449 Alexander & Alexander 700 16,497 13,650 0.0223
450 Sante Fe Resources 1,500 13,813 13,500 0.0220
451 Cincinnati Milicron 600 11,480 13,200 0.0216
452 Longs Drug Store 400 14,308 13,150 0.0215
453 Harland, John 600 14,480 12,975 0.0212
454 USAIR Group 1,000 15,850 12,875 0.0210
455 Cray Research Inc. 500 14,912 12,813 0.0209
456 Maxus Energy 2,300 16,828 12,650 0.0207
457 Rowan Cos. Inc. 1,400 11,145 12,600 0.0206
458 Yellow Corp. 500 13,613 12,438 0.0203
459 Crane Co. 500 12,600 12,375 0.0202
D-14
</TABLE>
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND INDEX SERIES,
S&P 500 Trust 2
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
of Total
Portfolio Market
No. Common Stocks Shares Cost Value(1) Value
<S> <C> <C> <C> <C>
460 Meredith Corp. 300 $ 8,553 $ 12,000 0.0196%
461 Tektronix Inc. 500 11,025 11,750 0.0192
462 Stone Container Corp. 1,210 24,148 11,647 0.0190
463 Alberto Culver 500 12,412 11,563 0.0189
464 Andrew Corp. 300 5,175 11,550 0.0189
465 Bruno's Inc. 1,300 17,000 11,539 0.0188
466 Amdahl Corp. 1,900 21,513 11,400 0.0186
467 Coors (Adolph) Cl. B. 700 9,835 11,375 0.0186
468 Springs Ind. 300 12,453 11,325 0.0185
469 Luby's Cafeteria Inc. 500 9,300 11,250 0.0184
470 Helmerich & Payne 400 9,482 11,150 0.0182
471 ARMCO Inc. 1,800 12,252 10,800 0.0176
472 Brown Group 300 8,315 10,388 0.0170
473 Eastern Enterprises 400 10,707 10,200 0.0167
474 NACCO Inds. Inc. Cl. A 200 11,198 10,300 0.0165
475 Shared Medical Sys. Corp. 400 8,575 9,950 0.0162
476 Transco Energy 700 10,310 9,888 0.0161
477 Community Psychiatric Center 700 7,872 9,800 0.0160
478 Oneok Inc. 500 9,450 9,438 0.0154
479 Harnishfeger Indus. 400 7,820 9,000 0.0147
480 Basset Furniture Inds. 250 8,600 8,750 0.0143
481 Intergraph Corp. 800 11,487 8,500 0.0139
482 Ryans Family Steak House 900 8,750 8,100 0.0132
483 Handleman Co. 600 8,292 7,950 0.0130
484 Bally Mfg. 800 5,715 6,800 0.0111
485 Outboard Marine Corp. 300 6,378 6,713 0.0110
486 Rollins Environmental SE 1,000 10,938 5,750 0.0094
487 Zurn Ind. Inc. 200 7,410 5,475 0.0089
488 Data General Corp. 500 5,362 4,688 0.0077
489 NL Industries 900 5,845 4,050 0.0068
490 National Intergroup 300 3,853 3,975 0.0065
491 Skyline Corp. 200 3,685 3,950 0.0064
492 First Mississippi 300 2,940 3,938 0.0064
493 Oshkosh B'Gosh Cl. A 200 5,075 3,900 0.0064
494 SPX Corp. 200 3,573 3,550 0.0058
495 Zennith Electronics 500 4,088 3,500 0.0057
496 M/A Com. Inc. 400 2,420 3,450 0.0056
497 Hartmarx Corp. 400 2,495 2,800 0.0046
498 National Education 400 3,045 2,500 0.0041
499 Fedders Corp. 300 1,790 1,913 0.0031
500 Genesco Inc. 300 2,190 1,575 0.0026
___________ ___________ ________
TOTAL $56,301,138 $61,242,485 100.0000
___________ ___________ ________
___________ ___________ ________
</TABLE>
(1) See Notes to Financial Statements.
D-15
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
The Sponsors, Co-Trustees and Holders
of Defined Asset Funds - Equity Income Fund
Index Series, S&P Midcap Trust:
We have audited the accompanying statement of condition of Defined Asset
Funds - Equity Income Fund Index Series, S&P Midcap Trust, including the
portfolio, as of December 31, 1993 and the related statements of
operations and of changes in net assets for the year ended December 31,
1993 and the period February 20 to December 31, 1992. These financial
statements are the responsibility of the Co-Trustees. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Securities owned at December 31, 1993, as shown in such
portfolio, were confirmed to us by Investors Bank & Trust Company, a
Co-Trustee. An audit also includes assessing the accounting principles
used and significant estimates made by the Co-Trustees, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Defined Asset Funds -
Equity Income Fund Index Series, S&P Midcap Trust at December 31, 1993 and
the results of its operations and changes in its net assets for the
above-stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE
NEW YORK, N.Y.
March 4, 1994
D - 16
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
STATEMENT OF CONDITION
As of December 31, 1993
<TABLE>
<S> <C>
TRUST PROPERTY:
INVESTMENT IN MARKETABLE SECURITIES - AT VALUE (COST $30,172,815) (NOTE 1)................................. $ 34,005,913
DIVIDENDS RECEIVABLE....................................................................................... 53,744
RECEIVABLE FOR SECURITIES SOLD OR REDEEMED................................................................. 568,763
-------------
TOTAL TRUST PROPERTY....................................................................................... 34,628,420
LESS LIABILITIES:
ADVANCE FROM CO-TRUSTEE...................................................................... $ 5,949
ACCRUED EXPENSES............................................................................. 16,364
CASH PRINCIPAL OVERDRAFT..................................................................... 565
-------------
TOTAL LIABILITIES............................................................................ 22,878
-------------
NET ASSETS, REPRESENTED BY:
30,239,077 UNITS OF FRACTIONAL UNDIVIDED INTEREST OUTSTANDING (NOTE 3)...................... 34,574,111
UNDISTRIBUTED NET INVESTMENT INCOME.......................................................... 31,431
-------------
NET ASSETS..................................................................................... $ 34,605,542
=============
UNITS OUTSTANDING............................................................................................ 30,239,077
=============
NET ASSET VALUE PER UNIT..................................................................................... $ 1.14440
=============
See Notes To Financial Statements.
</TABLE>
D - 17
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
February 20,
1992
Year Ended to
December 31, December 31,
1993 1992
---- ----
<S> <C> <C>
INVESTMENT INCOME:
DIVIDEND INCOME............................................................................. 589,506 192,922
CO-TRUSTEES' FEES AND EXPENSES.............................................................. (118,503) (31,760)
SPONSORS' FEES.............................................................................. (9,486) 0
------------- -------------
NET INVESTMENT INCOME....................................................................... 461,517 161,162
------------- -------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
NET REALIZED GAIN ON SECURITIES SOLD OR REDEEMED............................................ 947,793 2,798
UNREALIZED APPRECIATION OF INVESTMENTS...................................................... 2,350,501 1,482,597
------------- -------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS............................................. 3,298,294 1,485,395
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......................................... $ 3,759,811 $ 1,646,557
============= =============
See Notes to Financial Statements.
</TABLE>
D - 18
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
February 20,
1992
Year Ended to
December 31, December 31,
1993 1992
---- ----
<S> <C> <C>
OPERATIONS:
NET INVESTMENT INCOME....................................................................... $ 461,517 $ 161,162
NET REALIZED GAIN ON SECURITIES SOLD OR REDEEMED............................................ 947,793 2,798
UNREALIZED APPRECIATION OF INVESTMENTS...................................................... 2,350,501 1,482,597
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........................................ 3,759,811 1,646,557
------------- -------------
DISTRIBUTIONS TO HOLDERS: (NOTE 2)
INCOME...................................................................................... (466,939) (170,432)
PRINCIPAL................................................................................... (206,835) (2,743)
------------- -------------
TOTAL DISTRIBUTIONS......................................................................... (673,774) (173,175)
------------- -------------
UNIT TRANSACTIONS:
ISSUANCE OF ADDITIONAL UNITS (NOTE 4)....................................................... 11,043,575 17,002,548
------------- -------------
TOTAL UNIT TRANSACTIONS..................................................................... 11,043,575 17,002,548
------------- -------------
NET INCREASE IN NET ASSETS.................................................................... 14,129,612 18,475,930
NET ASSETS AT BEGINNING OF PERIOD............................................................. 20,475,930 2,000,000
------------- -------------
NET ASSETS AT END OF PERIOD................................................................... $ 34,605,542 $ 20,475,930
============= =============
PER UNIT:
INCOME DISTRIBUTIONS DURING PERIOD.......................................................... $ 0.01685 $ 0.01407
============= =============
PRINCIPAL DISTRIBUTIONS DURING PERIOD....................................................... $ 0.00684 $ 0.00015
============= =============
NET ASSET VALUE AT END OF PERIOD............................................................ $ 1.14440 $ 1.03692
============= =============
TRUST UNITS:
ISSUED DURING PERIOD........................................................................ 10,492,227 17,700,815
============= =============
OUTSTANDING AT END OF PERIOD................................................................ 30,239,077 19,746,850
============= =============
See Notes To Financial Statements.
</TABLE>
D - 19
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Fund is registered under the Investment Company Act of 1940 as a
Unit Investment Trust. The following is a summary of significant
accounting policies consistently followed by the Fund in the
preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
(a) Securities are stated at market value; for securities listed on a
national securities exchange, value is based on the closing price
on such exchange and for securities not so listed, value is based
on the current bid price on the over-the-counter market.
Realized gains or losses on sales of securities are determined
using the first-in, first-out cost method.
(b) The Fund is not subject to income taxes. Accordingly, no
provision for such taxes is required.
(c) Dividend income is recorded on the ex-dividend date.
2. DISTRIBUTIONS
A distribution of net investment income is made to Holders on the
twenty-fifth day of each month. Receipts other than dividends, after
deductions for redemptions and applicable expenses, are distributed as
explained in "Administration of the Fund" in this Prospectus, Part B.
3. NET CAPITAL
Cost of 30,239,077 units at Dates of Deposit........... $ 30,690,600
Less sales charge...................................... 690,600
-------------
Net amount applicable to Holders....................... 30,000,000
Net realized gain on securities sold or redeemed....... 950,591
Net unrealized appreciation of investments............. 3,833,098
Principal distributions................................ (209,578)
-------------
Net capital applicable to Holders...................... $ 34,574,111
=============
4. REDEMPTIONS
Holders may request redemptions of units by presentation thereof to
the Co-Trustee, Investors Bank & Trust Company.
5. INCOME TAXES
As of December 31, 1993, net unrealized appreciation of investments,
based on cost for Federal income tax purposes, aggregated $3,833,098,
of which $1,577,213 related to depreciated securities and $5,410,311
related to appreciated securities. The cost of investment securities
for Federal income tax purposes was $30,172,815 at December 31, 1993.
D - 20
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
1 General Motors Corp 16,600 $ 506,667 $ 485,550 1.4274%
2 U S Health Care Inc 7,550 314,875 435,069 1.2794
3 United Healthcare Corp 5,300 275,765 402,138 1.1826
4 Morgan Stanley Group Inc 5,300 299,340 374,975 1.1027
5 Southwest Airlines Co 9,750 181,550 365,625 1.0752
6 Bank of New York Co Inc 6,400 313,720 364,800 1.0728
7 CUC International Inc 7,675 140,350 276,300 0.8125
8 Franklin Resources Inc 5,800 190,030 266,075 0.7824
9 Shaw Industries Inc 10,000 151,015 253,750 0.7462
10 International Game Technology 8,600 198,400 253,700 0.7460
11 Keycorp 7,100 259,722 251,162 0.7386
12 Tyson Foods Inc 10,300 215,063 247,200 0.7269
13 First Bank System Inc 8,000 226,350 246,000 0.7234
14 First Financial Mgmt Corp 4,100 149,082 232,675 0.6842
15 AON Corp 4,700 228,885 227,362 0.6686
16 Silicon Graphics Inc 9,120 122,248 225,720 0.6638
17 Circus Circus Enterprises Inc 6,100 196,947 225,700 0.6637
18 Cabletron Systems Inc 2,000 189,325 225,000 0.6616
19 Comerica Inc 8,396 250,697 223,543 0.6574
20 Northeast Utilities 9,400 240,095 223,250 0.6565
21 Fifth Third Bancorp 4,250 212,275 219,937 0.6468
22 Applied Materials Inc 5,600 94,375 217,000 0.6381
23 Potomac Electric Power Co 8,100 202,118 216,675 0.6372
24 Nextel Communications Inc 5,800 271,950 216,050 0.6353
25 Office Depot Inc 6,300 129,678 211,838 0.6229
26 Florida Progress Corp 6,250 198,975 210,156 0.6180
27 Allegheny Power Systems Inc 7,900 185,742 209,350 0.6156
28 AFLAC Inc 7,225 184,995 205,912 0.6055
29 Washington Post Co 800 185,465 203,800 0.5993
30 Progressive Corp Ohio 5,000 135,008 202,500 0.5955
31 Wisconsin Energy Corp 7,300 191,450 201,663 0.5930
32 State Street Boston Corp 5,300 198,313 198,750 0.5845
33 LDDS Communications Inc 4,102 122,640 197,922 0.5820
34 Freeport-McMoran Inc 9,900 192,877 195,525 0.5750
35 Chiron Corp 2,300 127,200 193,200 0.5681
36 Willamette Industries Inc 3,800 147,100 188,100 0.5531
37 Anadarko Petroleum Corp 4,100 123,617 186,037 0.5471
38 Teco Energy Inc 8,100 167,103 183,263 0.5389
39 Perrigo Co 5,300 170,475 181,525 0.5338
40 New England Electric Systems 4,600 165,043 179,975 0.5292
41 Bear Stearns Co Inc 8,149 135,246 178,259 0.5242
42 Telephone and Data Systems 3,300 128,540 172,013 0.5058
43 Sigma-Aldrich Corp 3,500 174,975 168,000 0.4940
44 Cincinnati Gas & Electric Co 6,100 152,587 167,750 0.4933
45 Southern New England Telecommunications 4,500 150,838 162,563 0.4780
Corp
46 Lubrizol Corp 4,700 143,698 160,388 0.4716
47 SCANA Corp 3,200 136,548 159,200 0.4682
48 Molex Inc 4,475 127,425 158,863 0.4672
49 First of America Bank Corp 4,000 142,637 157,000 0.4617
50 NIPSCO Industries Inc 4,600 120,918 151,225 0.4447
51 New York State Electric & Gas Corp 4,900 150,895 150,675 0.4431
52 American Pwr Conversion Corp 6,300 78,375 149,625 0.4400
53 Kansas City Southern Industries Inc 2,900 72,492 149,350 0.4392
54 Northern Trust Corp 3,750 149,825 148,594 0.4370
55 CMS Energy Corp 5,900 115,245 148,237 0.4359
</TABLE>
D - 21
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
56 Mirage Resorts Inc 6,200 $ 95,860 $ 148,025 0.4353%
57 Equifax Inc 5,300 99,515 145,087 0.4267
58 Brinker International Inc 3,150 88,047 144,900 0.4261
59 Parametric Technology Corp 3,700 86,025 143,375 0.4216
60 Forest Laboratories Inc 3,000 110,225 142,875 0.4201
61 Sensormatic Electronics Corp 4,050 87,573 141,244 0.4154
62 IVAX Corp 4,900 140,382 140,875 0.4143
63 McCormick & Co, Inc 5,700 146,875 140,363 0.4128
64 Mylan Laboratories Inc 5,500 138,513 139,563 0.4104
65 Coca-Cola Enterprises Inc 9,100 118,567 138,775 0.4081
66 Thermo Electron Corp 3,300 108,058 138,600 0.4076
67 Pinnacle West Capital Corp 6,100 119,718 136,488 0.4014
68 Leggett & Platt Inc 2,700 81,548 135,000 0.3970
69 Public Service Co of Colorado 4,200 117,760 134,925 0.3968
70 Sonoco Products Co 6,100 133,825 134,200 0.3946
71 Consolidated Papers Inc 3,100 129,250 134,075 0.3943
72 Laidlaw Inc CLB 19,500 175,062 134,062 0.3942
73 Heilig Meyers Co 3,375 64,950 131,625 0.3871
74 Schwab Charles Corp 4,050 82,215 131,119 0.3856
75 Micron Technology Inc 2,800 60,328 129,850 0.3818
76 MAPCO Inc 2,100 117,305 128,363 0.3775
77 Fruit of the Loom Inc 5,300 212,790 127,862 0.3760
78 Unifi Inc 4,750 136,035 127,656 0.3754
79 Murphy Oil Corp 3,100 114,330 124,000 0.3646
80 Synoptics Communications Inc 4,300 89,250 119,863 0.3525
81 Tambrands Inc 2,700 163,285 119,475 0.3513
82 Allegheny Ludlum Corp 5,000 90,507 119,375 0.3510
83 Harley-Davidson Inc 2,700 88,777 119,137 0.3503
84 Lyondell Petrochemical Co 5,600 136,680 119,000 0.3499
85 Trinity Industries Inc 2,750 71,975 118,594 0.3487
86 Stewart & Stevenson Services Inc 2,300 74,675 117,875 0.3466
87 Illinois Power Co 5,300 119,440 117,263 0.3448
88 Dreyfus Corp 2,600 101,892 117,000 0.3441
89 AES Corp 3,300 103,400 115,500 0.3396
90 Cracker Barrel Old Ctry Store Inc 4,150 108,150 114,125 0.3356
91 Seagate Technology Inc 4,800 80,825 114,000 0.3352
92 Meridian Bancorp Inc 4,000 115,525 114,000 0.3352
93 Dole Food Co 4,200 135,022 112,350 0.3304
94 Cintas Corp 3,300 94,375 112,200 0.3299
95 Witco Corp 3,500 86,170 111,563 0.3281
96 Omnicom Group Inc 2,400 93,770 111,000 0.3264
97 Puget Sound Power & Light Co 4,400 116,245 109,450 0.3219
98 Avnet Inc 2,800 85,965 109,200 0.3211
99 Crestar Financial Corp 2,600 88,122 108,875 0.3202
100 Marshall & Ilsley Corp 4,600 94,775 108,675 0.3196
101 Rochester Telephone Corp 2,400 84,970 108,300 0.3185
102 Illinois Central Corp 2,950 73,145 105,831 0.3112
103 Sundstrand Corp 2,500 100,638 105,000 0.3088
104 Penn Central Corp 3,200 75,004 103,600 0.3047
105 Oklahoma Gas & Electric Co 2,800 98,953 103,600 0.3047
106 Southtrust Corp 5,450 94,675 103,550 0.3045
107 Apache Corp 4,300 89,040 100,512 0.2956
108 Kansas City Power & Light Co 4,300 96,805 98,900 0.2908
109 Provident Life & Accident Ins Co of 3,200 83,745 98,800 0.2905
America CLB
110 Continental Bank Corp 3,700 73,110 97,587 0.2870
</TABLE>
D - 22
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
111 Linear Technology Corp 2,500 $ 57,625 $ 96,875 0.2849%
112 Delmarva Power & Light Co 4,100 92,042 96,862 0.2848
113 Home Shopping Network Inc 6,500 48,865 96,688 0.2843
114 Stryker Corp 3,400 113,775 96,050 0.2825
115 Informix Corp 4,500 82,150 95,625 0.2812
116 Clayton Homes Inc 3,938 66,603 95,484 0.2808
117 Montana Power Co 3,700 95,448 95,275 0.2802
118 LG&E Energy Corp 2,350 80,405 95,175 0.2799
119 Edwards AG Inc 3,300 81,060 94,875 0.2790
120 El Paso Natural Gas Co 2,600 98,205 93,600 0.2752
121 Noble Affiliates Inc 3,500 64,650 92,750 0.2727
122 Loctite Corp 2,500 109,625 92,500 0.2720
123 Questar Corp 2,800 72,103 92,400 0.2717
124 Ipalco Enterprises Inc 2,600 91,655 92,300 0.2714
125 Utilicorp United Inc 2,900 81,395 92,075 0.2708
126 Storage Technology Corp 2,900 106,183 91,713 0.2697
127 York International Corp 2,600 102,893 91,650 0.2695
128 Century Telephone Enterprises 3,550 92,515 91,412 0.2688
129 Caesars World Inc 1,700 66,310 90,737 0.2668
130 Lac Minerals Limited 10,300 67,652 90,125 0.2650
131 Fingerhut Companies Inc 3,200 90,560 90,000 0.2647
132 Multimedia Inc 2,600 79,125 89,050 0.2619
133 Southwestern Public Service Co 2,900 91,333 88,813 0.2612
134 National Fuel Gas Co 2,600 74,193 88,400 0.2600
135 National Health Laboratories Inc 6,200 86,073 88,350 0.2598
136 Alexander & Baldwin Inc 3,300 82,900 88,275 0.2596
137 Dean Foods Co 2,700 71,735 88,087 0.2590
138 Betz Laboratories Inc 2,000 111,382 87,750 0.2580
139 Biogen Inc 2,200 73,625 87,725 0.2580
140 Arrow Electronics Inc 2,100 66,717 87,675 0.2578
141 Diebold Inc 1,450 59,292 87,362 0.2569
142 Dollar Gen Corp 2,887 53,067 86,610 0.2547
143 BMC Software Inc 1,800 104,775 86,400 0.2541
144 Brooklyn Union Gas Co 3,150 70,397 86,231 0.2536
145 UJB Financial Corp 3,600 76,318 85,500 0.2514
146 IBP Inc 3,300 62,190 85,388 0.2511
147 First Security Corp 3,250 82,650 85,312 0.2509
148 CML Group Inc 3,600 75,205 85,050 0.2501
149 Transatlantic Holdings Inc 1,600 71,543 83,800 0.2464
150 Analog Devices Inc 3,400 48,670 83,725 0.2462
151 First Alabama Bancshares Inc 2,580 78,775 83,527 0.2456
152 Kemper Corp 2,300 70,852 83,375 0.2452
153 Comsat Corp (2) 2,800 66,350 83,300 0.2450
154 Atlantic Southeast Airlines Inc 2,400 52,625 82,200 0.2417
155 Bancorp Hawaii Inc 2,000 92,725 82,000 0.2411
156 IMC Fertilizer Group Inc 1,800 79,040 81,675 0.2402
157 Longview Fibre Co 3,600 62,093 81,450 0.2395
158 Atlantic Energy Inc 3,700 82,860 80,475 0.2367
159 Crompton & Knowles Corp 3,600 75,392 79,200 0.2329
160 Idaho Power Co 2,600 71,667 78,975 0.2322
161 CBI Industries Inc 2,600 80,155 78,975 0.2322
162 Flightsafety International Inc 2,300 103,090 78,775 0.2317
163 Xilinx Inc 1,600 42,950 76,400 0.2247
164 Central Fidelity Banks Inc 2,750 73,687 76,312 0.2244
165 Danaher Corp 2,000 52,125 76,250 0.2242
166 Cardinal Distribution Inc 1,600 53,250 76,000 0.2235
</TABLE>
D - 23
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
167 First Virginia Banks Inc 2,300 $ 75,537 $ 75,325 0.2215%
168 Lancaster Colony Corp 1,633 46,793 75,118 0.2209
169 First Tennessee Natl Corp 1,950 71,825 75,075 0.2208
170 Kelly Services Inc 2,700 82,050 74,925 0.2203
171 Paychex Inc 2,125 46,025 74,375 0.2187
172 Belo A H Corp 1,400 57,545 74,200 0.2182
173 Tidewater Inc 3,700 66,485 74,000 0.2176
174 Harsco Corp 1,800 66,427 73,125 0.2150
175 MCN Corp 2,100 58,518 72,975 0.2146
176 Mercantile Bancorporation 1,600 72,665 72,200 0.2123
177 Varian Association Inc 1,200 48,773 72,000 0.2117
178 Chris-Craft Industries Inc 1,946 57,442 71,272 0.2096
179 Adobe Systems Inc 3,200 70,700 71,200 0.2094
180 Pacificare Health Systems Inc 1,900 69,753 71,013 0.2088
181 Schulman A Inc 2,100 64,250 70,875 0.2084
182 Cabot Corp 1,300 57,965 70,037 0.2060
183 Service Merchandise Co 7,000 77,340 70,000 0.2058
184 Nevada Power Co 2,900 64,383 69,963 0.2057
185 Nordson Corp 1,300 63,275 69,875 0.2055
186 Rollins Inc 2,550 56,905 69,488 0.2043
187 Wisconsin Pwr & Light (WPL) Holdings Co 2,100 70,093 69,038 0.2030
188 Minnesota Power & Light Co 2,100 68,793 68,775 0.2022
189 Reynolds & Reynolds Co 1,500 38,355 68,438 0.2013
190 Keystone International Inc 2,500 63,150 68,438 0.2013
191 Intelligent Electronics Inc 2,500 36,312 68,437 0.2013
192 Carter-Wallace Inc 3,200 97,855 68,400 0.2011
193 Wilmington Trust Corp 2,600 70,300 68,250 0.2007
194 Hawaiian Electric Industries Inc 1,900 70,732 68,162 0.2004
195 ADC Telecommunications Inc 1,900 36,800 67,687 0.1990
196 Portland General Corp 3,300 59,528 67,650 0.1989
197 Morrison Restaurants Inc (3) 2,575 45,280 67,594 0.1988
198 Phillips Van Heusen Corp 1,800 48,965 67,500 0.1985
199 Federal Signal Corp 2,400 52,185 67,200 0.1976
200 Hartford Steam Boiler & Inspections Ins Co 1,500 79,875 66,750 0.1963
201 Teradyne Inc 2,400 38,033 66,600 0.1958
202 Family Dollar Stores Inc 3,900 76,440 66,300 0.1950
203 Atlanta Gas Light Co 1,700 61,235 66,087 0.1943
204 Ferro Corp 2,050 58,365 65,600 0.1929
205 West One Bancorp 2,300 52,125 65,550 0.1928
206 Information Resources Inc 1,700 49,475 65,450 0.1925
207 Hon Industries Inc 2,300 52,400 64,400 0.1894
208 Olin Corp 1,300 59,803 64,188 0.1888
209 Tosco Corp 2,200 54,198 64,075 0.1884
210 Universal Corp Virginia 2,500 70,813 64,063 0.1884
211 Seagull Energy Corp 2,500 44,908 63,438 0.1865
212 Bob Evans Farms Inc 2,900 56,412 63,437 0.1865
213 Valero Energy Corp 3,000 77,125 63,375 0.1864
214 Cirrus Logic Inc 1,700 43,725 62,900 0.1850
215 Georgia Gulf Corp 2,800 62,302 62,650 0.1842
216 RPM Inc Ohio 3,600 59,688 62,550 0.1839
217 Hannaford Brothers Co 2,900 65,870 62,350 0.1834
218 FHP International Corp 2,300 44,850 62,100 0.1826
219 Health Care Compare Corp 2,500 69,337 61,562 0.1810
220 Staples Inc 2,400 57,200 61,200 0.1800
221 Mercantile Bankshares Corp 3,200 64,850 61,200 0.1800
222 Universal Foods Corp 1,900 61,895 61,038 0.1795
</TABLE>
D - 24
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
223 Federal-Mogul Corp 2,100 $ 39,392 $ 60,900 0.1791%
224 Sotheby's Holdings Inc 3,900 51,695 59,963 0.1763
225 Modine Manufacturing Co 2,100 39,188 59,850 0.1760
226 Lands End Inc 1,300 40,803 59,800 0.1759
227 Dell Computer Corp 2,600 82,025 58,825 0.1730
228 Medical Care America Inc 2,532 102,785 57,920 0.1703
229 Washington Gas Light Co 1,400 51,470 57,750 0.1698
230 Glatfelter (P.H.) Co 3,100 55,430 57,737 0.1698
231 Bowater Inc 2,500 57,100 57,500 0.1691
232 GATX Corp 1,400 43,145 57,050 0.1678
233 Wausau Paper Mills Co 1,433 47,887 56,962 0.1675
234 Battle Mountain Gold Co 5,600 37,592 56,700 0.1667
235 Magma Power Co Inc 1,600 44,350 56,400 0.1659
236 Hanna M A Co 1,700 46,747 55,462 0.1631
237 Miller Herman Inc 1,800 36,850 55,125 0.1621
238 Beckman Instruments Inc 2,000 43,550 54,750 0.1610
239 WATTS Industries Inc 1,100 52,525 54,450 0.1601
240 Liberty National Bancorp Inc 1,800 43,975 54,450 0.1601
241 Overseas Shipholding Group Inc 2,300 40,040 54,338 0.1598
242 Legent Corp 2,400 96,500 54,300 0.1597
243 Wallace Computer Services Inc 1,600 42,430 54,200 0.1594
244 Buffetts Inc 2,100 34,075 54,075 0.1590
245 Baroid Corp 6,500 40,962 53,625 0.1577
246 Dauphin Deposit Corp 2,100 47,850 53,025 0.1559
247 Media General Inc 1,800 35,715 52,875 0.1555
248 LSI Logic Corp 3,300 33,427 52,800 0.1553
249 Vanguard Cellular Systems Inc 1,800 47,725 52,650 0.1548
250 Comdisco Inc 2,710 41,760 52,167 0.1534
251 Fiserv Inc 2,700 48,525 51,975 0.1528
252 NovaCare Inc 3,400 66,420 51,850 0.1525
253 First Brands Corp 1,500 43,062 51,750 0.1522
254 Iowa-Illinois Gas & Electric Co 2,100 49,292 51,712 0.1521
255 American President Co 900 35,370 51,525 0.1515
256 Conner Peripherals Inc 3,500 65,262 51,187 0.1505
257 Banta Corp 1,400 36,550 50,750 0.1492
258 Mark IV Industries 2,815 43,785 50,670 0.1490
259 Healthsouth Rehabilitation Corp 2,000 43,612 50,500 0.1485
260 Stratus Computer Inc 1,600 63,368 50,200 0.1476
261 Lance, Inc 2,200 52,275 50,050 0.1472
262 AST Research Inc 2,200 40,075 50,050 0.1472
263 PHH Corp 1,200 45,798 49,800 0.1464
264 Flowers Industries Inc 2,600 47,280 49,725 0.1462
265 Policy Management Systems Corp 1,600 105,868 49,600 0.1459
266 Cordis Corp 1,000 30,000 49,375 0.1452
267 Airborne Freight Corp 1,400 30,870 49,175 0.1446
268 Houghton Mifflin Co 1,000 36,562 48,625 0.1430
269 Diamond Shamrock Inc 2,000 40,637 48,500 0.1426
270 TCA Cable TV Inc 1,700 35,800 48,450 0.1425
271 Vons Companies Inc 3,000 74,250 48,000 0.1412
272 U S Shoe Corp 3,200 42,023 48,000 0.1412
273 Arvin Industries Inc 1,500 43,650 48,000 0.1412
274 Edison Brothers Stores Inc 1,600 64,180 47,600 0.1400
275 Stanhome Inc 1,400 46,320 47,425 0.1395
276 Smucker J M Co 2,100 58,430 46,988 0.1382
277 Genzyme Corp 1,700 70,450 46,750 0.1375
278 Global Marine Inc 11,300 33,490 46,613 0.1371
</TABLE>
D - 25
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
279 Altera Corp 1,400 $ 26,787 $ 45,850 0.1348%
280 Teleflex Inc 1,200 39,273 44,400 0.1306
281 Sealed Air Corp 1,400 34,743 44,275 0.1302
282 Donaldson Co Inc 1,000 33,557 44,250 0.1301
283 Sbarro Inc 1,000 36,013 44,125 0.1298
284 Bergen Brunswig Corp 2,500 49,525 44,062 0.1296
285 Mentor Graphics Corp 3,200 37,063 44,000 0.1294
286 Sci-Med Life Systems Inc 1,100 60,125 43,175 0.1270
287 Wellman Inc 2,300 53,703 43,125 0.1268
288 Quantum Corp 3,000 44,975 42,375 0.1246
289 Lawter International Inc 3,100 41,830 42,238 0.1242
290 Standard Register Co 2,000 36,850 41,500 0.1220
291 Pentair Inc 1,250 37,775 41,250 0.1213
292 Mac Frugals Bargains Close Outs Inc (4) 2,100 33,658 41,213 0.1212
293 Chesapeake Corp 1,600 36,517 40,800 0.1200
294 Lincoln Telecommunications Co 1,100 28,150 40,700 0.1197
295 Jacobs Engineering Group Inc 1,700 47,160 40,588 0.1194
296 Surgical Care Affiliates Inc 2,600 71,750 40,300 0.1185
297 Albany International Corp 2,100 35,167 40,162 0.1181
298 Dexter Corporation 1,700 42,135 39,950 0.1175
299 OEA Inc 1,400 37,633 39,725 0.1168
300 Central Louisiana Electric Inc 1,600 39,007 39,600 0.1165
301 Church & Dwight Inc 1,400 40,620 39,550 0.1163
302 Symantec Corp 2,100 45,313 38,325 0.1127
303 Lukens Inc 1,050 40,383 38,325 0.1127
304 Ametek Inc 3,000 48,075 38,250 0.1125
305 Arnold Industries Inc 1,800 28,850 37,800 0.1112
306 Duty Free International Inc 1,900 60,107 37,762 0.1110
307 Goulds Pumps Inc 1,500 37,212 37,312 0.1097
308 Thiokol Corp 1,400 24,995 37,100 0.1091
309 Neutrogena Corp 1,800 38,500 36,900 0.1085
310 Ruddick Corp 1,600 29,555 36,800 0.1082
311 Carlisle Co Inc 1,100 25,192 36,712 0.1080
312 NCH Corp 600 38,830 36,600 0.1076
313 Calgon Carbon Corp 2,800 50,640 36,400 0.1070
314 Octel Communications Corp 1,300 33,000 36,075 0.1061
315 Cadence Design Systems Inc 3,100 58,767 36,037 0.1060
316 Fuller H B Co 1,000 41,300 36,000 0.1059
317 Kennametal Inc 800 25,890 35,600 0.1047
318 Ranger Oil Ltd 6,900 41,845 35,363 0.1040
319 Oregon Steel Mills Inc 1,400 33,558 35,175 0.1034
320 Tiffany & Co 1,100 38,493 35,063 0.1031
321 Indiana Energy Inc 1,600 31,667 34,800 0.1023
322 Carpenter Technology Corp 600 29,830 34,800 0.1023
323 Nabors Industries Inc 4,400 31,533 34,650 0.1019
324 Structural Dynamics Research Corp 2,000 31,488 34,500 0.1015
325 Cypress Semiconductor Corp 2,500 29,125 34,062 0.1002
326 Calmat Co 1,600 36,392 33,800 0.0994
327 Centocor Inc 2,900 46,187 33,712 0.0991
328 Central Maine Power Co 2,200 48,585 33,000 0.0970
329 Public Service Co of New Mexico 2,900 34,870 32,625 0.0959
330 Sequent Computer Systems Inc 2,100 36,800 32,025 0.0942
331 Gencorp Inc 2,200 28,260 31,350 0.0922
332 Waban Inc 2,300 44,053 31,338 0.0922
333 Symbol Technologies Inc 1,700 28,610 30,813 0.0906
334 Verifone Inc 1,600 36,300 30,800 0.0906
</TABLE>
D - 26
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
335 International Dairy Queen Inc 1,700 $ 32,850 $ 30,600 0.0900%
336 Diagnostek Inc 1,600 21,917 30,400 0.0894
337 Cleveland-Cliffs Inc 800 28,315 29,900 0.0879
338 Nellcor Inc 1,200 32,713 29,700 0.0873
339 Dreyers Grand Ice Cream, Inc 1,000 26,025 29,500 0.0867
340 Southdown Inc 1,200 14,760 29,400 0.0865
341 Precision Castparts Corp 1,000 23,288 29,000 0.0853
342 Lawson Products Inc 1,000 26,850 29,000 0.0853
343 Western Publishing Group Inc 1,500 26,925 28,875 0.0849
344 Borland International Inc 1,900 67,012 28,262 0.0831
345 International Multifoods Corp 1,400 36,295 26,950 0.0793
346 Exabyte Corp 1,500 35,612 26,437 0.0777
347 Anthem Electronics Inc 900 34,607 25,987 0.0764
348 Air & Water Technologies Corp 1,700 25,197 25,500 0.0750
349 Quaker State Corp 1,900 24,270 25,413 0.0747
350 Claire's Stores Inc 1,400 16,620 25,375 0.0746
351 Magnetek Inc 1,700 29,835 25,288 0.0744
352 Savannah Foods & Industries Inc 1,800 29,588 24,975 0.0734
353 Kaydon Corp 1,200 30,200 24,900 0.0732
354 Aldus Corp 900 17,975 24,525 0.0721
355 Acuson Corp 2,000 34,987 24,250 0.0713
356 National Presto Industries Inc 500 31,063 24,063 0.0708
357 City National Corp 3,200 28,531 24,000 0.0706
358 Measurex Corp 1,200 23,148 23,700 0.0697
359 Smith International 2,700 24,048 23,625 0.0695
360 Dibrell Bros Inc 900 32,800 23,625 0.0695
361 Gibson Greetings Inc 1,100 24,562 23,237 0.0683
362 Sequa Corp 700 25,573 22,750 0.0669
363 Black Hills Corp 1,000 26,787 22,750 0.0669
364 Enterra Corp 1,100 20,692 22,550 0.0663
365 Topps Co Inc 3,200 43,663 22,400 0.0659
366 MAXXAM Inc 600 19,493 22,125 0.0651
367 Continental Medical Systems Inc 2,500 40,700 21,562 0.0634
368 Parker Drilling Co 3,900 21,095 21,450 0.0631
369 T2 Medical Inc 2,700 68,535 21,263 0.0625
370 BJ Services Co 1,100 18,767 21,175 0.0623
371 Duriron Co Inc 900 22,450 21,150 0.0622
372 Granite Contstruction Inc 800 17,825 20,000 0.0588
373 Synergen Inc 1,700 70,913 19,338 0.0569
374 Sizzler International Inc 2,000 21,450 18,250 0.0537
375 Cross A T Co 1,200 25,072 18,150 0.0534
376 Network Systems Corp 2,100 24,788 17,850 0.0525
377 CPI Corp 1,000 20,750 17,250 0.0507
378 Angelica Corp 600 17,892 16,950 0.0498
379 Diagnostic Products Corp 900 25,007 16,762 0.0493
380 Ennis Business Forms 1,200 20,522 16,050 0.0472
381 Brush Wellman Inc 1,100 17,167 15,675 0.0461
382 Datascope Corp 1,100 25,600 15,400 0.0453
383 Sterling Chemicals Inc 3,800 16,103 15,200 0.0447
384 Hancock Fabrics Inc 1,500 18,462 14,250 0.0419
385 Knowledgeware Inc 900 12,850 13,838 0.0407
386 Rohr Industries Inc 1,200 14,973 13,350 0.0393
387 Varco International Inc 2,200 12,060 13,200 0.0388
388 Mid-American Waste Systems Inc 1,600 24,280 13,200 0.0388
389 Alaska Air Group Inc 900 15,820 12,712 0.0374
390 Puritan-Bennett Corp 800 21,925 12,600 0.0371
</TABLE>
D - 27
<PAGE>
DEFINED ASSET FUNDS - EQUITY INCOME FUND
INDEX SERIES, S&P MIDCAP TRUST
PORTFOLIO
AS OF DECEMBER 31, 1993
<TABLE>
<CAPTION>
Percentage
Portfolio of Total
No. Common Stocks Shares Cost(1) Value(1) Market Value
___ _____________ ______ _______ ________ ____________
<S> <C> <C> <C> <C> <C>
391 Merry-Go Round Enterprises 3,700 $ 49,123 $ 12,488 0.0367%
392 Advanced Technology Labs Inc (5) 700 15,085 11,725 0.0345
393 National Pizza Co 1,700 13,125 11,050 0.0325
394 Michael Foods Inc 1,300 15,388 10,400 0.0306
395 Convex Computer Corp 1,700 13,922 9,350 0.0275
396 Applied Bioscience International Inc 1,800 23,425 9,225 0.0271
397 International Technology Corp 2,300 12,765 8,625 0.0254
398 Xoma Corp 1,500 18,950 7,875 0.0232
399 American Waste Services 2,000 6,500 6,250 0.0184
_________________ ________________ ______________
TOTAL
$ 30,172,815 $ 34,005,913 100.0000%
================= ================ ==============
NOTES:
(1) See Notes to Financial Statements.
(2) Formerly Communications Satellite.
(3) Formerly Morrison Inc.
(4) Formerly Pic'N Save Corp.
(5) Formerly Westmark International, Inc.
</TABLE>
D - 28
<PAGE>
Defined
Asset Funds
INVESTOR'S GUIDE DEFINED EQUITY INCOME FUND
INDEX SERIES Our defined portfolios of equities offer investors
S&P 500 TRUST 2 a simple and convenient way to participate in the
S&P MIDCAP TRUST equity markets. By purchasing defined equity
EQUITY INCOME FUND funds, investors not only avoid the problem of
UNIT INVESTMENT TRUSTS selecting securities by themselves, but also gain
the advantage of diversification by investing in
securities of several different issuers. Spreading
your investment among different securities and
issuers reduces your risk, but does not eliminate
it.
THE INDEX SERIES
One of the greatest benefits of performance is the
total return. After all, total return is why
you're investing in stocks. The tricky part is
keeping the cost of your investments from eating
away at your profits. That's where we can help.
The Index Series was created for investors, like
yourself, who are looking for an opportunity to
reflect the performance of a major market index.
WHY INDEX YOUR INVESTMENT?
Indexing is an investment strategy that allows you
to invest in a portfolio of stocks that is
carefully structured to mirror, as closely as
possible, the total return of a market index. The
chart below illustrates the performance of the S&P
500 Index over the past 10 years and of the S&P
MidCap Index in 1991-1993.
S&P 500 Index S&P Midcap Index
Performance* Performance*
1984 +6.27
1985 +31.73
1986 +18.66
1987 +5.25
1988 +16.61
1989 +31.69
1990- 3.10
1991 +30.47
1992 +7.66
1993 +10.08
*Past performance does not guarantee future
results. The figures reflect the reinvestment of
dividends on a monthly basis but not commissions.
Because of sales charges and expenses, actual
returns on the Trusts would be lower. Performance
figures for the S&P MidCap Index reflect the stock
prices since the beginning of 1991, although the
index was created on June 5, 1991.
SIMPLIFIED DECISION-MAKING
When you invest in the Index Series, you don't
have to select individual stocks or market
sectors. You are, in effect, buying the major
portion of the market represented by the index.
Your portfolio is broadly diversified. Of course,
the Trusts may not hold all of the stocks in the
Index at all times, but will seek to reflect the
performance of the respective indices.
- ------------------
This page may not be distributed unless included in a current prospectus.
Investors should refer to the prospectus for further information.
<PAGE>
MONTHLY INCOME OR
REINVESTMENT
The Trusts pay income
monthly or you can
elect to have any
dividend income and
capital gains
automatically
reinvested into
additional units of
the same Trust at net
asset value. By
reinvesting your
income, you not only
increase your holding
but gain the important
benefits that monthly
compounding can have
on total return
performance.
RISK REDUCTION WITH
DIVERSIFICATION
One of the best
reasons for an
indexing approach to
investing is the fact
that indexing reduces
the volatility of
individual stocks. It
substantially reduces
the risk of investing
in a single stock or
industry through
diversification. By
owning units in a
Trust, you participate
in a broadly
diversified portfolio.
Through one purchase,
you are instantly
diversified among
hundreds of companies
in four industry
sectors. This way,
your exposure to risk
is substantially
reduced, especially
when compared to
buying one, two or
even ten of the
individual stocks.
A LIQUID INVESTMENT
Although not legally
required to do so, we
have maintained a
secondary market for
Defined Asset Funds
for over 20 years. You
can cash in your Units
at any time. Your
price is based on the
market value of the
securities in the
Portfolio at that
time. Or, you can
exchange your
investment for another
Defined Asset Fund at
a reduced sales
charge. There is never
a fee for cashing in
your investment.
VOLUME PURCHASE
DISCOUNTS
For larger purchases,
the rate of sales
charge is
substantially reduced
to put a greater
percentage of your
investment dollars to
work for you.
<TABLE>
<CAPTION>
SALES CHARGE
AS A PERCENTAGE OF
AMOUNT PURCHASED THE PUBLIC OFFERING PRICE
---------------------------------------------------------------------------
<S> <C>
Less than $25,000 2.25%
$25,000-$49,999 2.00%
$50,000-$74,999 1.75%
$75,000-$99,999 1.50%
$100,000-$249,999 1.25%
$250,000 or more 1.00%
</TABLE>
RISK FACTORS
The value of the Units may fluctuate with changes
in the financial condition of the issuers of
stocks held, changes in the industry sectors
represented and the value of stocks generally.
Dividends are subject to the financial condition
of, and declaration by, the issuers. There can be
no assurance that the Fund will achieve its
objective. Although the Portfolio is monitored, it
will change primarily to replicate the composition
of the index and not because of the financial
condition of stock issuers.
<PAGE>
INVESTMENT SUMMARY AS OF THE EVALUATION DATE (CONTINUED)
and the declaration of any such dividends depends upon several factors including
the financial condition of the issuers and general economic conditions. The
adverse financial condition of a company will not result directly in its
elimination from a Portfolio unless the company is removed from the relevant
Index. Substantially all income distributions from the Fund, when received by
Holders, will constitute dividend income for Federal income tax purposes (see
Taxes).
An investment in Units should also be made with an understanding of the
risks inherent in an investment in equity securities, including the risk that
the financial condition of the issuers of the Securities may become impaired or
that the general condition of the stock market may worsen (either of which may
cause a decrease in the value of the Securities and thus in the value of the
Units). Common stocks are susceptible to general stock market fluctuations and
to volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on unpredictable
factors including expectations regarding government economic, monetary and
fiscal policies, inflation and interest rates, economic expansion or
contraction, and global and regional political, economic and banking crises.
(See Risk Factors.)
The Sponsors may deposit either additional Securities, contracts to
purchase additional Securities or cash (or a bank letter or letters of credit in
lieu of cash) with instructions to purchase additional Securities (where
additional Units are to be offered to the public) (see Administration of the
Fund--Portfolio Supervision), in each case maintaining, as closely as
practicable, the proportionate relationship among the Securities in the S&P 500
Index or S&P MidCap Index, as the case may be. If cash (or a bank letter of
credit in lieu of cash) is deposited with instructions to purchase Securities,
to the extent the price of a Security increases or decreases between the time of
deposit and the time any Security is purchased, Units will represent less or
more of that Security and more or less of the other Securities in a Trust. Price
fluctuations during the period from the time of deposit of cash (or a bank
letter of credit in lieu of cash) in a Trust to the time the Securities are
purchased will affect the value of the Units and the income per Unit received by
a Trust. In order to minimize these effects, each Trust will try to purchase
Securities as near as possible to the Evaluation Time or at prices as close as
possible to the prices used to evaluate the Trust at the Evaluation Time.
Investors should be aware that the S&P MidCap Trust may not invest more
than 5% of its assets in the stock of any issuer that derives more than 15% of
its revenues from securities-related activities (a 'securities-related issuer')
or invest in a securities-related issuer if its stock is not a marginable
security under Regulation T promulgated by the Board of Governors of the Federal
Reserve System. Because it is believed to be unlikely that any issuer, whether
or not securities-related, will account for more than 5% of the S&P MidCap Index
or that the S&P MidCap Index will include any non-marginable securities-related
issuer, the foregoing restrictions are not expected to have a significant effect
on the correlation between the S&P MidCap Trust and the S&P MidCap Index. The
S&P 500 Trust is not affected by the foregoing restrictions because it is
covered by an SEC exemptive order.
DISTRIBUTIONS AND REINVESTMENT OF INCOME--Monthly distributions of
dividends received will be made by each Trust in cash on the date set forth
under Investment Summary on pA-3 to Holders of record on the Record Day set
forth on pA-3. Distributions of capital gain net income (i.e., the excess of
capital gains over capital losses) recognized, if any, will be made after the
end of each Trust's taxable year. In order to meet certain tax requirements
either Trust may make a special distribution of income, including capital gains,
to Holders of record as of a date in December. (See Taxes.) Holders may elect to
have distributions from a Trust reinvested in additional whole or fractional
Units of the Trust at no sales charge (see Administration of the Fund--
Reinvestment Plan). However, whether or not a distribution is received in cash,
the distribution will be taxable to the Holder.
TAXATION--Distributions which are taxable as ordinary income to Holders
will constitute dividends for Federal income tax purposes. Such dividends will
be eligible for the 70% dividends-received deduction available to certain
corporations to the extent of qualifying dividends received from domestic
corporations. (See Taxes.)
PUBLIC OFFERING PRICE--The Public Offering Price per 1,000 Units is based
on the aggregate value of the underlying Securities divided by the number of
Units outstanding times 1,000 plus the sales charge. A proportionate share of
the amount in the Income Account and the amount in the Capital Account to the
extent not allocated to the purchase of Securities (described under
Administration of the Fund--Accounts and Distributions) on the date of delivery
of the Units to the purchaser is added to the Public Offering Price. The maximum
sales charge is 2.25% of the Public Offering Price.* Units are offered at the
Public Offering Price computed as of the Evaluation Time for all sales
subsequent to the previous evaluation. The Public Offering Prices on the
Investment Summary Date and on subsequent dates, will vary from the Public
Offering Prices set forth on pA3. (See Public Sale of Units--Public Offering
Price.)
- ------------------------------------
*This sales charge will be reduced on a graduated scale in the case of quantity
purchases. (See Public Sale of Units--Public Offering Price.)
A-5
<PAGE>
INVESTMENT SUMMARY AS OF THE EVALUATION DATE (CONTINUED)
PURCHASE OF UNITS--Units can be purchased by contacting the Sponsors, whose
addresses are listed on the back cover of this Prospectus. The minimum purchase
is 1,000 Units at a purchase price of approximately $1,000, except that
purchases under the Reinvestment Plan and by Individual Retirement Accounts and
certain other tax deferred retirement plans are unrestricted (see Retirement
Plans).
MARKET FOR UNITS--Although not obligated to do so, the Sponsors intend to
maintain a market for Units based on the aggregate value of the underlying
Securities. If a market is not maintained, it is unlikely that a Holder would be
able to dispose of his Units other than through redemption (see Redemption).
UNDERWRITING ACCOUNT
Certain of the Sponsors may have participated as issuer, sole underwriter,
managing underwriter or member of an underwriting syndicate in a public offering
of some of the Securities in the Portfolios (see Composition of Indices).
The names and addresses of the Underwriters and their several interests in
the Underwriting Account are:
<TABLE>
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith P.O. Box 9051, Princeton, N.J. 08543-9051 76.00%
Incorporated
Shearson Lehman Brothers Inc. Two World Trade Center--101st Floor,
New York, N.Y. 10048 6.00
Prudential Securities Incorporated One Seaport Plaza--199 Water Street,
New York, N.Y. 10292 7.50
PaineWebber Incorporated 1285 Avenue of the Americas, New York, N.Y. 10019 3.00
Dean Witter Reynolds Inc. Two World Trade Center, 69th Floor,
New York, N.Y. 10048 5.50
Broadcort Capital Corp. 100 Church Street, New York, N.Y. 10007 1.00
Gruntal & Co. Incorporated 14 Wall Street, New York, N.Y. 10001 1.00
------
100.00%
------
------
</TABLE>
A-6
<PAGE>
DEFINED ASSET FUNDS--EQUITY INCOME FUND
INDEX SERIES
S&P 500 TRUST 2 AND S&P MIDCAP TRUST
FUND STRUCTURE
This Series (the 'Fund') of Equity Income Fund, consists of two unit
investment trusts, the S&P 500 Trust 2 (the 'S&P 500 Trust') and the S&P MidCap
Trust, created under New York law by Trust Indentures (the 'Indentures')* among
the Sponsors and each Trustee. Unless otherwise indicated, when Investors Bank &
Trust Company and The First National Bank of Chicago act as Co-Trustees to a
Trust, references to the Trustee in the Prospectus shall be deemed to refer to
Investors Bank & Trust Company and The First National Bank of Chicago, as
Co-Trustees.
On the Evaluation Date each Unit represented the fractional undivided
interest in the Trust set forth under Investment Summary. During the Initial
Deposit Period, the Sponsors deposited additional cash (or bank letters of
credit in lieu of cash) with instructions to continue to purchase Securities (in
order to create new Units) with the goal of gradually purchasing all of the
stocks in each Index. It may not be possible to maintain this exact
proportionate relationship among the Securities because of, among other reasons,
purchase requirements and changes in prices. If additional Units are issued by
either Trust (through deposit of additional Securities by the Sponsors or
purchase of Securities by the Trustee) for purposes of sale or reinvestment, the
aggregate value of Securities in the Trust will be increased and the fractional
undivided interest represented by each Unit in the balance will be decreased. If
any Units of either Trust are redeemed, the aggregate value of Securities in the
Trust will be reduced, and the fractional undivided interest represented by each
remaining Unit in the balance will be increased. Units will remain outstanding
until redeemed upon tender to the Trustee by any Holder (which may include the
Sponsors) or until the termination of the Indenture (see Administration of the
Fund).
In accordance with the Indentures the Sponsors may deposit additional cash
(or a letter of credit accompanied by instructions to buy specified Securities)
in either Trust in connection with the issuance of additional Units, in each
case maintaining, as closely as practicable, the proportionate relationship
among the Securities in the S&P 500 Index or the S&P MidCap Index, as the case
may be. Purchase and sale transactions will be effected in accordance with
computer program output showing which Securities are under-or over-represented
in the Portfolio. Neither the Sponsors nor the Trustee will exercise any
investment discretion in connection therewith. Precise duplication of the
relationship among the Securities in the relevant Index may not be achieved
because it may be economically impracticable or impossible to acquire very small
numbers of shares of certain Index Stocks and because of other procedural
policies of the Fund, but correlation between the relevant Index and the
investment results of each Trust is expected to be between .97 and .99 (see
Description of the Fund--The Portfolios--The S&P 500 Index and The S&P MidCap
Index).
As used herein the terms 'Common Stocks' and 'Securities' refer to the
common stocks (or cash or a letter of credit together with instructions to
purchase common stocks) deposited in the Fund.
RISK FACTORS
An investment in Units should be made with an understanding of the risks
which an investment in common stocks entails including the risk that the
financial condition of the issuers of the Securities may become impaired or that
the general condition of the common stock market may worsen (either may cause a
decrease in the value of Securities and thus in the value of the Units). In
addition, investors should be aware that no attempt is made to 'manage' the
Portfolios in the traditional sense and, as a result, the adverse financial
condition of a company will not result directly in its elimination from a
Portfolio unless the company is removed from the applicable Index.
Holders of common stocks have rights to receive payments from the issuers
of those common stocks that are generally inferior to those of creditors of, or
holders of debt obligations or preferred stocks of, such issuers.
- ------------------------------------
* To the extent references in this Prospectus are to articles and sections
of the Indentures, which are hereby incorporated by reference, the statements
made herein are qualified in their entirety by such reference.
1
<PAGE>
Holders of common stocks of the type held by the Fund have a right to receive
dividends only when and if, and in the amounts, declared by the issuer's board
of directors and have a right to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preferred stocks have the right to
receive dividends at a fixed rate when and as declared by the issuer's board of
directors, normally on a cumulative basis, but do not participate in other
amounts available for distribution by the issuing corporation. Common stocks are
especially susceptible to general stock market movements and to volatile
increases and decreases in value as market confidence in and perceptions of the
issuers change. These perceptions are based on unpredictable factors including
expectations regarding government economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. In addition, common stocks do
not represent an obligation or liability of the issuer and therefore do not
offer any assurance of income or provide the degree of protection of capital of
debt securities. Indeed, the issuance of debt securities or even preferred stock
will create prior claims for payment of principal, interest, liquidation
preferences and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or the
rights of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. Further, unlike debt securities which typically have
a stated principal amount payable at maturity (whose value, however, will be
subject to market fluctuations prior thereto), common stocks have neither a
fixed principal amount or liquidation preference nor a maturity or redemption
date and have values which are subject to market fluctuations for as long as the
stocks remain outstanding. While it may not be likely that any stock's dividends
would be omitted, no assurances can, of course, be given since earnings
available for dividends, regardless of the size of the company, are subject to
numerous events which are often beyond the issuer's control. The value of the
Securities in the Portfolios thus may be expected to fluctuate over the entire
life of a Trust to values higher or lower than those prevailing on the
Evaluation Date (see Administration of the Fund--Amendment and Termination).
Whether or not the Securities are listed on a national securities exchange,
the principal trading market for the Securities may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the Securities
may depend on whether dealers will make a market in the Securities. There can be
no assurance that a market will be made for any of the Securities, that any
market for the Securities will be maintained or of the liquidity of the
Securities in any markets made. In addition, the Fund may be restricted under
the Investment Company Act of 1940 from selling Securities to the Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of a
Trust will be adversely affected if trading markets for the Securities are
limited or absent.
Investors should note that additional Units may be offered to the public
from time to time and that the creation of additional Units may have an effect
upon the value of previously existing Units. To create additional Units the
Sponsor may deposit cash with instructions to purchase Securities (or a bank
letter of credit in lieu of cash) in amounts sufficient to maintain to the
extent practicable the relative weighting among the Securities as exists among
the Common Stocks in the applicable Index based on the price of the Securities
at the Evaluation Time on the date the cash is deposited. To the extent the
price of a Security increases or decreases between the time cash is deposited
with instructions to purchase the Security and the time the cash is used to
purchase the Security, Units will represent less or more of that Security and
more or less of the other Securities in the Trust. Holders will be at risk
because of price fluctuations during this period; if the price of shares of a
Security increases, Holders will have an interest in fewer shares of that
Security, and if the price of a Security decreases, Holders will have an
interest in more shares of that Security, than if the Security had been
purchased on the date cash was deposited with instructions to purchase the
Security. In addition, brokerage fees incurred in purchasing Securities of each
Trust will be an expense of the Trust. Thus, price fluctuations during this
period and commissions payable by a Trust in purchasing Securities will affect
the value of the Units of every Holder of that Trust and the income per Unit
received by the Trust. In order to minimize these effects, the Fund will try to
purchase Securities as close as possible to the next Evaluation Time or at
prices as close as possible to the prices used to evaluate the Fund at the next
Evaluation Time (see Public Sale of Units--Public Offering Price).
In connection with the creation of additional Units (for purposes of sale
or reinvestment), the Sponsors may at their option deposit with the Trustee a
letter of credit, accompanied by instructions to buy specified Securities. The
amount of such letter of credit will generally be based on the closing price of
the Securities on the day that the additional Units were created. Since the
actual purchases of the Securities cannot be executed until the following
business day, the relevant Trust will benefit from any decrease, on a net basis,
in the actual prices paid for the Securities and will be subject to a risk that
the price of the Securities, on a net basis, will rise above that used in the
valuation. Amounts not invested because of a decrease in stock prices will be
invested on the following
2
<PAGE>
business day and any additional amounts necessary to purchase the Securities
because of an increase in stock prices will be advanced by the Trustee.
DESCRIPTION OF THE FUND
THE PORTFOLIOS
General--Since the objective of the Fund is to provide investment results
that duplicate substantially the price and yield performance (in other words,
the total return) of the S&P 500 Index, in the case of the S&P 500 Trust, and
the S&P MidCap Index, in the case of the S&P MidCap Trust, the Portfolio of each
Trust will at any time consist of as many of the Index Stocks as is feasible.
Each Trust will at all times be invested in no less than 95% of the Index
Stocks. Although, at any time, a Trust may fail to own certain of the Index
Stocks, each Trust will be substantially totally invested in Index Stocks and
the Sponsors expect to maintain a theoretical correlation of between .97 and .99
between the investment performance of the relevant Index and that derived from
ownership of Units. Adjustments will be made in accordance with the computer
program output to bring the weightings of the Securities more closely into line
with their weightings in the relevant Index as each Trust invests in new
Securities in connection with the creation of new Units, as companies are
dropped from or added to either Index or as Securities are sold to meet
redemptions. These adjustments will be made on the business day following the
relevant transaction in accordance with computer program output showing which
Securities are under-or over-represented in each Portfolio. Adjustments may also
be made at other times to bring either Portfolio into line with the applicable
Index. The proceeds from any such sale will be invested in those Index Stocks
which the computer program output indicates are most under-represented (see
Administration of the Fund--Portfolio Supervision).
The Sponsors anticipate that the selection of any additional Index Stocks
deposited or purchased in connection with the creation of additional Units of a
Trust will be those stocks which are most under-represented in the Portfolio
based upon the computer program output and the applicable Index as of the date
prior to the date of such subsequent deposit or purchase. Securities sold in
order to meet redemptions will be those stocks which are most over-represented
in the Portfolio based upon the computer program output and the applicable Index
as of the date prior to the date of such sale.
Finally, from time to time adjustments may be made in either Portfolio
because of changes in the composition of the applicable Index. Based on past
history, it is anticipated that most such changes will occur as a result of
merger or acquisition activity. In such cases, the Fund, as shareholder of a
company which is the object of such merger or acquisition activity, will
presumably receive various offers from would-be acquirors of the company. The
Trustees will not be permitted to accept any such offers until such time as the
company has been deleted from the applicable Index. Since, in most cases, a
company is removed from an Index only after the consummation of a merger or
acquisition of the company, it is anticipated that the Fund will generally
acquire, in exchange for the stock of the deleted company, whatever
consideration is being offered to shareholders of that company who have not
tendered their shares prior to such time. Any cash received in such transactions
will be reinvested in the most under-represented Index Stocks. Any securities
received as a part of the consideration which are not included in the relevant
Index will be sold as soon as practicable and reinvested in the most under-
represented Index Stocks.
In attempting to duplicate the proportionate relationships represented by
the S&P 500 Index and the S&P MidCap Index the Sponsors do not anticipate
purchasing or selling shares in quantities of less than round lots. In addition,
certain Index Stocks may at times not be available in the quantities in which
the computer program specifies that they be purchased. For these reasons, among
others, precise duplication of this proportionate relationship may not ever be
possible but nevertheless will continue to be the goal in connection with all
acquisitions or dispositions of Securities (see Administration of the
Fund--Portfolio Supervision). As the holder of the Securities, the Trustees will
have the right to vote all of the voting stocks in the Portfolio and will vote
such stocks in accordance with the instructions of the Sponsors except that, if
the Trustee holds any of the common stocks of Merrill Lynch & Co., Inc.,
Prudential Insurance Company of America (the parent of Prudential Securities
Incorporated) or The Travelers Inc. (as long as it remains the parent of Smith
Barney Shearson Inc.) or any other common stock of companies which are
affiliates of the Sponsors, the Trustee will vote such stock in the same
proportionate relationship as all other shares of such companies are voted.
The Fund consists of unit investment trusts and is not a managed fund.
Traditional methods of investment management for a managed fund typically
involve frequent changes in a portfolio of securities on the basis of
3
<PAGE>
economic, financial and market analyses. The Portfolios of the Fund, however,
will not be managed. Instead, the only purchases and sales that will be made
with respect to the Fund Portfolios will be those necessary to create, to the
extent feasible, Portfolios which will substantially duplicate the S&P 500 Index
and the S&P MidCap Index, taking into consideration redemptions, sales of
additional Units and the other adjustments referred to above. Since no attempt
is made to 'manage' the Portfolios in the traditional sense, the adverse
financial condition of a company will not be the basis for the sale of its
securities from the Portfolio unless the company is removed from the relevant
Index.
The investments of the Holders of Units of the Fund will be liquidated on
the fixed date specified on pA-3. In addition, Holders will have the right to
have their Units redeemed at a price based on the aggregate value of the
Securities in the Trust ('Redemption Price per Unit') if they cannot be sold in
the over-the-counter market which the Sponsors propose to maintain (see Market
for Units and Redemption).
The Fund is not sponsored, endorsed, sold or promoted by Standard & Poor's
Corporation and such Corporation makes no representation, express or implied, to
the Fund or the Holders of Fund Units regarding the advisability of investing in
index or unit investment trusts generally or in the Fund particularly or the
ability of the S&P 500 Index or the S&P MidCap Index to track general stock
market performance.
Selection and Acquisition of Securities--The yield and price of common
stocks deposited in the Fund are dependent on a variety of factors, including
money market conditions and general conditions of the corporate equity markets.
As additional Stocks continue to be purchased the Trusts will more closely
approximate (although not exactly duplicate) the proportionate relationships of
such stocks within the S&P 500 Index, in the case of the S&P 500 Trust
Portfolio, and the S&P MidCap Index, in the case of the S&P MidCap Trust
Portfolio.
The Fund will consist of such of the Securities as may continue to be held
from time to time in each Trust and any additional Securities acquired and held
by the Fund pursuant to the provisions of the Indentures (including the
provisions with respect to the deposit into the Fund of Securities in connection
with the sale of additional Units to the public and the automatic reinvestment
of distributions to Holders who have elected to participate in the Reinvestment
Plan) together with undistributed income therefrom and undistributed and
uninvested cash realized from the disposition of Securities (see Administration
of the Fund--Accounts and Distributions). It is anticipated that the amount of
such uninvested cash will rarely be significant and that, in any event, such
amount as exists at the time of any valuation of the Fund will almost always be
invested in additional Index Stocks on the following business day. Neither the
Sponsors nor the Trustees shall be liable in any way for any default, failure or
defect in any of the Securities.
Because certain of the Securities from time to time may be sold or their
percentage reduced under certain circumstances described herein, no assurance
can be given that either Trust will retain for any length of time its size and
composition as of any particular date (see Administration of the Fund--Amendment
and Termination). Each Indenture requires the Sponsors, as part of their
administrative function, to instruct the Trustee to reinvest the net proceeds of
the sale of Securities in additional Index Stocks to the extent that such
proceeds are not required for the redemption of Units.
THE S&P 500 INDEX AND THE S&P MIDCAP INDEX
The S&P 500 Index is composed of 500 selected common stocks, most of which
are listed on the New York Stock Exchange. This well-known index, originally
consisting of 233 stocks in 1923, was expanded to 500 stocks in 1957 and was
restructured in 1976 to a composite consisting of industrial, utility, financial
and transportation market sectors. It contains a variety of companies with
diverse capitalization, market-value weighted to represent the overall market.
The index represents approximately 68% of U.S. stock market capitalization. At
present, the mean market capitalization of the companies in the S&P 500 Index is
approximately $3,321 billion.
The following table shows the performance of the S&P 500 Index for 1960
through 1993. Stock prices fluctuated widely during the period and were higher
at the end than at the beginning. The results shown should not be considered as
a representation of the income yield or capital gain or loss which may be
generated by the S&P 500 Index in the future.
4
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
YEAR-END INDEX
YEAR-END VALUE DIVIDENDS
YEAR-END INDEX VALUE CHANGE IN INDEX AVERAGE YIELD REINVESTED
YEAR INDEX VALUE* 1960=100 FOR YEAR FOR YEAR* 1960=100**
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1960.......................................... 58.11 100.00 -- % 3.47% 100.00
1961.......................................... 71.55 123.13 23.13 2.98 126.79
1962.......................................... 63.10 108.59 -- 11.81 3.37 115.71
1963.......................................... 75.02 129.10 18.89 3.17 141.93
1964.......................................... 84.75 145.84 12.97 3.01 165.09
1965.......................................... 92.43 159.06 9.06 3.00 185.48
1966.......................................... 80.33 138.24 -- 13.09 3.40 165.11
1967.......................................... 96.47 166.01 20.09 3.20 204.54
1968.......................................... 103.86 178.73 7.66 3.07 227.00
1969.......................................... 92.06 158.42 -- 11.36 3.24 207.89
1970.......................................... 92.15 158.58 0.10 3.83 216.06
1971.......................................... 102.09 175.68 10.79 3.14 247.52
1972.......................................... 118.05 203.15 15.63 2.84 294.30
1973.......................................... 97.55 167.87 -- 17.37 3.06 250.83
1974.......................................... 68.56 117.98 -- 29.72 4.47 184.64
1975.......................................... 90.19 155.21 31.55 4.31 253.25
1976.......................................... 107.46 184.93 19.15 3.77 312.94
1977.......................................... 95.10 163.66 -- 11.50 4.62 289.72
1978.......................................... 96.11 165.39 1.06 5.28 308.20
1979.......................................... 107.94 185.75 12.31 5.47 364.29
1980.......................................... 135.76 233.63 25.77 5.26 481.86
1981.......................................... 122.55 210.89 -- 9.73 5.20 457.72
1982.......................................... 140.64 242.02 14.76 5.81 555.84
1983.......................................... 164.93 283.82 17.27 4.40 680.24
1984.......................................... 167.24 287.80 1.40 4.64 721.73
1985.......................................... 211.28 363.59 26.33 4.25 949.59
1986.......................................... 242.17 416.75 14.62 3.49 1,125.83
1987.......................................... 247.08 425.19 2.03 3.08 1,183.25
1988.......................................... 277.72 477.92 12.40 3.64 1,379.78
1989.......................................... 353.40 608.15 27.25 3.13 1,617.04
1990.......................................... 330.22 568.27 -- 6.56 3.61 1,760.71
1991.......................................... 417.09 717.78 26.31 3.70 2,297.20
1992.......................................... 435.71 749.79 4.46 2.97 2,472.25
1993.......................................... 466.45 802.70 7.06 2.78 2,721.45
</TABLE>
- ---------------
*Source: Standard & Poor's Corporation. Yields are obtained by dividing the
aggregate cash dividends by the aggregate market value of the stocks in the
Index at the beginning of the period, assuming no reinvestment of dividends.
**Assumes that cash distributions on the securities which comprise the S&P 500
Index are treated as reinvested in the S&P 500 Index as of the end of each
month following the payment of the dividend. Because the Fund is sold to the
public at net asset value plus the applicable sales charge and the expenses of
the Fund are deducted before making distributions to Holders, investment in
the Fund would have resulted in investment performance to Holders somewhat
reduced from that reflected in the above table. In addition certain Holders
may not elect to participate in the Reinvestment Plan and to that extent cash
distributions representing dividends on the Index Stocks may not be reinvested
in other Index Stocks.
The S&P MidCap Index is composed of 400 selected common stocks of which, as
of the Evaluation Date, 262 were listed on the New York Stock Exchange, 11 were
listed on the American Stock Exchange and 127 were quoted on the NASDAQ National
Market System. The MidCap Index Stocks were chosen for market size, liquidity
and industry group representation. As of December 31, 1993, industrial stocks
accounted for approximately 66.7% of S&P MidCap Index market capitalization,
utilities approximately 14.7%, financial stocks approximately 15% and
transportation stocks approximately 2.9%. The capitalizations of individual
companies ranged from about $93 million to over $6,936 billion; the mean market
capitalization of the companies in the S&P MidCap Index was approximately $1,128
billion. The S&P MidCap Index was created June 5, 1991 and would have had a
total return, with monthly reinvested dividends, of 50.10% for the year if the
Index had been in existence for the entire year. The total return for 1993 was
13.95%.
5
<PAGE>
The chart below compares the relative total returns of the S&P 500 Index,
the S&P Midcap Index (although the Midcap Index was not created until June 5,
1991) and of over 2,000 small company stocks (as measured by Ibbotson
Associates) for the three years ended December 31, 1993. Of course, past
performance is no indication of future results. Performance of the index will
vary from the Trust because of Trust expenses (including brokers' commissions),
and sales charges, and the fact that the Trust may not be fully invested or
invested in the same weightings as the index at all times. These figures reflect
the reinvestment of dividends on a monthly basis.
CUMULATIVE RETURNS*, 3 YEARS ENDED DECEMBER 31, 1993
(VALUE OF $5,000 INVESTED AT BEGINNING OF PERIOD)
SMALL COMPANY
$11,000 -- STOCKS**
10,500 -- $10,791.48
S&P MIDCAP
10,000 -- INDEX
9,500 -- $9,571.32
9,000 --
8,500 --
8,000 -- S&P 500 INDEX
7,500 -- $7,728.27
7,000 --
6,500 --
<TABLE>
<S> <C>
* Returns for the indices reflect reinvested
dividends but
not commissions or taxes, nor Trust 2.25%
sales charges
or expenses, which could reduce the
performance quoted.
6,000 -- The Trust's average annualized return
(reflecting sales
charges and expenses) were 10.18% for 1993
and 8.82%
since inception.
5,500 -- ** As measured by Ibbotson Associates' index
of 2,000+
stocks
5,000 --
</TABLE>
The weightings of stocks in the S&P 500 Index and the S&P MidCap Index are
primarily based on each stock's relative total market value; that is, its market
price per share times the number of shares outstanding. The S&P 500 Index and
the S&P MidCap Index together represented approximately 78% of the total market
capitalization of stocks traded in the United States, as of March 31, 1994.
Stocks are generally selected for the Portfolios in the order of their
weightings in the relevant Index, beginning with the heaviest-weighted stocks.
The percentage of each Trust's assets invested in each stock is approximately
the same as the percentage it represents in the relevant Index.
Subject to market conditions, the Sponsors may create additional S&P 500 or
S&P MidCap Index Series of the Equity Income Fund. The Fund has entered into
license agreements with Standard & Poor's Corporation (the 'License
Agreements'), under which the Fund is granted licenses to use the trademarks and
tradenames 'S&P 500', 'Standard & Poors MidCap 400 Index' and other trademarks
and tradenames, to the extent the Sponsors deem appropriate and desirable under
federal and state securities laws to indicate the source of the Indices as a
basis for determining the composition of the Fund's investment portfolios. As
consideration for the grant of the license, each Trust will pay to Standard &
Poor's Corporation an annual fee equal to .02% of the average net asset value of
the Trust (or, if greater, $10,000). The License Agreements permit the Fund to
substitute another index for the S&P 500 Index or the S&P MidCap Index in the
event that Standard & Poor's Corporation ceases to compile and publish that
Index. In addition, if either Index ceases to be compiled or made available or
the anticipated correlations between the Trusts and the applicable Index is not
maintained, the Sponsors may direct that the affected Trust continue to be
operated using the S&P 500 Index or the S&P MidCap Index (as the case
6
<PAGE>
may be) as it existed on the last date on which it was available or may direct
that the applicable Indenture be terminated (see Administration of the
Fund--Amendment and Termination).
Neither the Fund nor the Holders is entitled to any rights whatsoever under
the foregoing licensing arrangements or to use any of the covered trademarks or
to use the S&P 500 Index or the S&P MidCap Index, except as specifically
described herein or as may be specified in the Indentures.
Standard and Poor's Corporation's only relationship to the Fund is the
licensing of the right to use the S&P 500 Index and the S&P MidCap Index as
bases for determining the composition of the Fund and to use the related
trademarks and tradenames in the name of the Fund and in the Prospectus and
related sales literature to the extent that the Sponsors deem appropriate or
desirable under Federal and state securities laws and to indicate the source of
the S&P 500 Index or the S&P MidCap Index. The S&P 500 Index and the S&P MidCap
Index are determined, comprised and calculated without regard to the Fund.
Standard and Poor's Corporation shall have no obligation to take the needs of
the Fund or its Holders into consideration in determining, comprising or
calculating the S&P 500 Index or the S&P MidCap Index. Standard and Poor's
Corporation is not responsible for and shall not participate in sales of Units
or in the determination of the timing of, prices at, or quantities and
proportions in which purchases or sales of Securities shall be made.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX AND THE S&P MIDCAP INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE
NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE SPONSORS, THE
FUNDS, ANY PERSON OR ANY ENTITY FROM THE USE OF THE S&P 500 INDEX OR THE S&P
MIDCAP INDEX OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE, WITH RESPECT TO THE S&P 500 INDEX OR THE S&P
MIDCAP INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.
Information on the S&P 500 Index and the S&P MidCap Index contained in this
Prospectus, as further updated, may also be included from time to time in other
prospectuses or in advertising material. The performance of a Trust or of either
Index (provided information is also given reflecting the performance of the
Trust in comparison to that Index) may also be compared to the performance of
money managers as reported in SEI Fund Evaluation Survey (the leading data base
of tax-exempt assets consisting of over 4,000 portfolios with total assets of
$250 billion) or of mutual funds as reported by Lipper Analytical Services Inc.
(which calculates total return using actual dividends on ex-dates accumulated
for the quarter and reinvested at quarter end), Money Magazine Fund Watch (which
rates fund performance over a specified time period after sales charge and
assuming all dividends reinvested) or Wiesenberger Investment Companies Service
(which states fund performance annually on a total return basis) or of the New
York Stock Exchange Composite Index, the American Stock Exchange Index
(unmanaged indices of stocks traded on the New York and American Stock
Exchanges, respectively), the Dow Jones Industrial Average (an index of 30
widely traded industrial common stocks) or the NASDAQ Composite Index (an
unmanaged index of over-the-counter stocks) or similar measurement standards
during the same period of time.
INCOME
The net annual income per Unit of a Trust is determined by subtracting from
the annual dividend income of the Securities in the Portfolio the estimated
annual expenses (total estimated annual Trustee's, Sponsors', Licensor's, and
administrative fees and expenses) and dividing by the number of Units
outstanding. The net annual income per Unit will change as the issuers of the
Securities change their dividend rate, as the issuers whose securities are
included in each Index change or as the expenses of a Trust change.
Record Days and Distribution Days are set forth under Investment Summary.
Dividend income per Unit received by each Trust and available for distribution
as of the next preceding Record Day will be distributed on or shortly after each
Distribution Day to the Holders of record on the preceding Record Day (see
Administration of the Fund--Accounts and Distributions). Distributions of net
realized capital gains, if any, will be made after the end of the Fund's taxable
year.
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TAXES
Each Trust has elected and intends to qualify for the special tax treatment
applicable to 'regulated investment companies' under Sections 851-855 of the
Internal Revenue Code of 1986, as amended (the 'Code'). Qualification and
election as a 'regulated investment company' involve no supervision of
investment policy or management by any government agency. If a Trust qualifies
as a 'regulated investment company' and distributes to Holders 90% or more of
its taxable income without regard to its net capital gain (net capital gain is
defined as the excess of net long-term capital gain over net short-term capital
loss), it will not be subject to Federal income tax on any portion of its
taxable income (including any net capital gain) distributed to Holders in a
timely manner. In addition, a Trust will not be subject to the 4% excise tax on
certain undistributed income of 'regulated investment companies' to the extent
it distributes to Holders in a timely manner at least 98% of its taxable income
(including any net capital gain). It is anticipated that each Trust will not be
subject to Federal income tax or the excise tax because the Indentures require
the distribution of each Trust's taxable income (including any net capital gain)
in a timely manner. Although all or a portion of a Trust's taxable income
(including any net capital gain) for the taxable year may be distributed shortly
after the end of the calendar year, such a distribution will be treated for
Federal income tax purposes as having been received by Holders during the
calendar year.
Distributions to Holders of a Trust's dividend income and net short-term
capital gain in any year will be taxable as ordinary income to Holders to the
extent of the Trust's taxable income (without regard to its net capital gain)
for that year. Any excess will be treated as a return of capital and will reduce
the Holder's basis in his Units and, to the extent that such distributions
exceed his basis, will be treated as a gain from the sale of his Units as
discussed below. It is anticipated that substantially all of the distributions
of a Trust's dividend income and net short-term capital gain will be taxable as
ordinary income to Holders.
Distributions of a Trust's net capital gain (designated as capital gain
dividends by the Trust) will be taxable to Holders as long-term capital gain,
regardless of the length of time the Units have been held by a Holder. A Holder
may recognize a taxable gain or loss if the Holder sells or redeems his Units.
Any gain or loss arising from (or treated as arising from) the sale or
redemption of Units will be a capital gain or loss, except in the case of a
dealer or a financial institution. Capital gains are generally taxed at the same
rate as ordinary income. However, the excess of net long-term capital gains over
net short-term capital losses may be taxed at a lower rate than ordinary income
for certain noncorporate taxpayers. A capital loss is long-term if the asset is
held for more than one year and short-term if held for one year or less. The
deduction of capital losses is subject to limitations.
Distributions which are taxable as ordinary income to Holders will
constitute dividends for Federal income tax purposes. To the extent that
distributions are appropriately designated by the Trust and are attributable to
dividends received by the Trust from domestic issuers with respect to whose
securities the Trust satisfied the requirements for the dividends-received
deduction, such distributions will be eligible for the dividends-received
deduction generally available for corporations (other than corporations such as
'S' corporations which are not eligible for such deduction because of their
special characteristics and other than for purposes of special taxes such as the
accumulated earnings tax and the personal holding company tax).
The dividends-received deduction is generally 70%. However, Congress from
time to time considers proposals to reduce the rate, and enactment of such a
proposal would adversely affect the after-tax return to investors who can take
advantage of the deduction. Holders are urged to consult their own tax advisors.
Sections 246 and 246A of the Code contain additional limitations on the
eligibility of dividends for the dividends-received deduction. Depending upon
the corporate Holder's circumstances (including whether it has a 45-day holding
period for its Units and whether its Units are debt financed), these limitations
may be applicable to dividends received from a Trust by a corporate Holder which
would otherwise qualify for the dividends-received deduction for corporations
under the principles discussed above. Accordingly, Holders should consult their
own tax advisers in this regard. A corporate Holder should be aware that the
receipt of dividend income for which the dividends received deduction is
available may give rise to an alternative minimum tax liability (or increase an
existing liability) because the dividend income will be included in the
corporation's 'adjusted current earnings' for purposes of the adjustment to
alternative minimum taxable income required by Section 56(g) of the Code.
The Federal tax status of each year's distributions will be reported to
Holders and to the Internal Revenue Service. The foregoing discussion relates
only to the Federal income tax status of the Fund and to the tax treatment of
distributions by the Fund to U.S. Holders. Holders that are not United States
citizens or residents
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should be aware that distributions from the Trusts will generally be subject to
a withholding tax of 30%, or a lower treaty rate, and should consult their own
tax advisers to determine whether investment in the Fund is appropriate. These
distributions may also be subject to state and local taxation and Holders should
consult their own tax advisors in this regard.
Holders will be taxed in the manner described above regardless of whether
distributions from the Trust are actually received by the Holder or are
reinvested pursuant to the Reinvestment Plan.
RETIREMENT PLANS
This Series of Defined Asset Funds--Equity Income Fund may be suited for
purchase by Individual Retirement Accounts ('IRAs'), Keogh plans, pension funds
and other qualified retirement plans, certain of which are briefly described
below. Generally, capital gains and income received in each of the foregoing
plans are exempt from Federal taxation. All distributions from such plans are
generally treated as ordinary income but may, in some cases, be eligible for
special 5 or 10 year averaging or tax-deferred rollover treatment. Holders of
Units in IRAs, Keogh plans and other tax-deferred retirement plans should
consult their plan custodian as to the appropriate disposition of distributions.
Investors considering participation in any such plan should review specific tax
laws related thereto and should consult their attorneys or tax advisers with
respect to the establishment and maintenance of any such plan. Such plans are
offered by brokerage firms, including the Sponsors of this Fund, and other
financial institutions. Fees and charges with respect to such plans may vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units may be purchased
by retirement plans established pursuant to the Self-Employed Individuals Tax
Retirement Act of 1962 ('Keogh plans') for self-employed individuals,
partnerships or unincorporated companies. Qualified individuals may generally
make annual tax-deductible contributions up to the lesser of 20% of annual
compensation or $30,000 in a Keogh plan. The assets of the plan must be held in
a qualified trust or other arrangement which meets the requirements of the Code.
Generally there are penalties for premature distributions from a plan before
attainment of age 59 1/2, except in the case of a participant's death or
disability and certain other related circumstances. Keogh plan participants may
also establish separate IRAs (see below) to which they may contribute up to an
additional $2,000 per year ($2,250 in a spousal account).
Individual Retirement Account--IRA. Any individual (including one covered
by a qualified private or government retirement plan) can establish an IRA or
make use of a qualified IRA arrangement set up by an employer or union for the
purchase of Units of the Fund. Any individual can make an investment in an IRA
equal to the lesser of $2,000 ($2,250 in a spousal account) or 100% of earned
income; such investment must be made in cash. However, the deductible amount an
individual may contribute will be reduced if the individual's adjusted gross
income exceeds $25,000 (in the case of a single individual), $40,000 (in the
case of married individuals filing a joint return) or $200 (in the case of a
married individual filing a seperate return). A married individual filing a
separate return will not be entitled to any reduction if the individual is
covered by an employer-maintained retirement plan without regard to whether the
individual's spouse is an active participant in an employer retirement plan.
Unless nondeductible contributions are made in 1987 or a later year, all
distributions from an IRA will be treated as ordinary income but generally will
be eligible for tax-deferred rollover treatment. It should be noted that certain
transactions which are prohibited under Section 408 of the Code will cause all
or a portion of the amount in an IRA to be deemed to be distributed and subject
to tax at that time. A participant's entire interest in an IRA must be, or
commence to be, distributed to the participant not later than April 1 following
the end of the taxable year during which the participant attains age 70 1/2.
Taxable distributions made before attainment of age 59 1/2, except in the case
of the participant's death or disability, or where the amount distributed is
part of a series of substantially equal periodic (at least annual) payments that
are to be made over the life expectancies of the participant and his
beneficiary, are generally subject to a surtax in an amount equal to 10% of the
distribution.
PUBLIC SALE OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units of each Trust is computed by adding
to the aggregate value of the Securities in the Trust (as determined by the
Trustee) divided by the number of Units outstanding, a sales charge of 2.302%.
This sales charge is equal to a gross underwriting commission of 2.25% of the
Public Offering Price. A proportionate share of the amount in the Income Account
(described under Administration of the Fund-- Accounts and Distributions) on the
date of delivery of the Units to the purchaser is added to the Public Offering
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Price. The Public Offering Price on the date of this Prospectus or on any
subsequent date will vary from the Public Offering Price on the Evaluation Date
(set forth on pA-3) in accordance with fluctuations in the aggregate value of
the underlying Securities.
The sales charge applicable to quantity purchases and the concession to
dealers per Unit (referred to below under Public Distribution) is reduced on a
graduated scale for sales to any purchaser of at least $25,000 of Units of a
Trust on any one day as follows:
CURRENTLY PAYABLE SALES
CHARGE DEALER
CONCESSION
AS PERCENT OF
----------------------------------------
AS PERCENT OF OFFERING PRICE
AS PERCENT OF NET AMOUNT --------------------
AMOUNTS PURCHASED OFFERING PRICE INVESTED
- ------------------------------------------------------------
Less than $25,000... 2.25% 2.302% 1.463%
$25,000-$49,999..... 2.00 2.041 1.300
$50,000-$74,999..... 1.75 1.781 1.138
$75,000-$99,999..... 1.50 1.523 0.975
$100,000-$249,999... 1.25 1.266 0.813
$250,000 or more.... 1.00 1.010 0.650
The above graduated sales charges will apply on all purchases on any one
day (with credit given for previously purchased Units as described below under
Right of Accumulation) by a single purchaser of Units in one or both Trusts of
this Fund only in the amounts stated. For this purpose purchases will not be
aggregated with concurrent purchases of any other unit trusts sponsored by the
Sponsors. However, units held in the name of the spouse of the purchaser or in
the name of a child of the purchaser under 21 years of age are deemed to be
registered in the name of the purchaser. The graduated sales charges are also
applicable to a trustee or other fiduciary purchasing securities for a single
trust estate or single fiduciary account. To qualify for the reduced sales
charge and concession applicable to quantity purchases, the dealer must confirm
that the sale is to a single purchaser. The sales charge is lower than sales
charges on many other equity investments.
Right of Accumulation. Reduced sales charges are applicable through a right
of accumulation under which eligible investors are permitted to purchase Units
of either Trust at the offering price applicable to the total of (a) the dollar
amount then being purchased plus (b) an amount equal to the then current net
asset value of the purchaser's holdings of Units of both Trusts. To be eligible
either for this right of accumulation or the reduced sales charge applicable to
purchases of both Trusts on the same day, the purchaser or the purchaser's
securities dealer must notify the Sponsors at the time of purchase that such
purchase qualifies under this accumulation provision and supply sufficient
information to permit confirmation of qualification. Acceptance of the purchase
order is subject to such confirmation. These reduced sales charge provisions may
be amended or terminated at any time without notice.
The value of the Securities is determined on each business day by the
Trustee based on the closing sale prices on the day the valuation is made or, if
there are no such reported sales or a Security is not listed on a national
securities exchange or if the principal market therefor is other than on such an
exchange, taking into account the same factors referred to under
Redemption--Computation of Redemption Price per Unit (Section 4.01).
PUBLIC DISTRIBUTION
The Sponsors intend to qualify Units for sale in all States in which
qualification is necessary through the Sponsors and dealers who are members of
the National Association of Securities Dealers, Inc. Sales to dealers, if any,
will initially be made at prices which represent a concession as set forth above
but Merrill Lynch, Pierce, Fenner & Smith, as Agent for the Sponsors ('Agent for
the Sponsors') reserves the right to change the amount of the concession to
dealers from time to time. The concession to dealers is reduced on a graduated
scale as indicated above.
UNDERWRITERS' AND SPONSORS' PROFITS
Upon sale of the Units, the Underwriters named under Underwriting Account,
including the Sponsors, receive sales charges at the rates set forth in the
table above. In addition, on each deposit of Index Stocks with respect to the
creation of additional Units (for purposes of sale or reinvestment) the Sponsors
may realize a profit or loss, based on the difference between the cost of the
Securities to the Fund and the purchase price of such
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Securities for the Sponsors. The Sponsors or any Underwriter may also realize
profits or sustain losses in respect of Securities deposited in the Fund which
were acquired by the Sponsors or such Underwriter from underwriting syndicates
of which the Sponsors or such Underwriter was a member and they also may realize
profits or sustain losses as a result of fluctuations in the aggregate value of
the Securities and hence in the Public Offering Price. Cash, if any, made
available by buyers of Units to the Sponsors prior to the settlement dates for
purchase of Units may be used in the Sponsors' businesses, subject to the
limitations of Rule 15c3-3 under the Securities Exchange Act of 1934, and may be
of benefit to the Sponsors.
Other than in the course of deposit transactions, the Sponsors will not be
permitted to derive profit from, or to in any manner deal with, the Fund while
acting as principal (as distinguished from brokerage transactions) (see
Administration of the Fund--Portfolio Supervision).
In maintaining a market for the Units (see Market for Units) the Sponsors
will also realize profits or sustain losses in the amount of any difference
between the prices at which they buy Units (based on the aggregate value of the
Securities) and the prices at which they resell such Units (which include the
sales charge) or the prices at which they redeem such Units (based on the
aggregate value of the Securities), as the case may be.
MARKET FOR UNITS
While the Sponsors are not obligated to do so, it is their intention to
maintain a market for Units of this Fund and continuously to offer to purchase
Units of this series at prices, subject to change at any time, which will be
computed for each Trust by adding (a) the aggregate value of Securities in the
Trust, (b) cash on hand in the Trust including dividends receivable on stocks
trading ex-dividend (other than cash covering contracts to purchase Securities)
and (c) all other assets in the Trust; deducting therefrom the sum of (x) taxes
or other governmental charges against the Trust not previously deducted, (y)
accrued fees and expenses of the Trustee (including legal and auditing
expenses), the Sponsors, the Licensor and counsel, and certain other expenses
and (z) cash held for distribution and any other amounts required to be
distributed (by sale of Securities or otherwise) to Holders of record as of a
date prior to the evaluation; and dividing the result of such computation by the
number or Units outstanding as of the date thereof. The Sponsors may discontinue
purchases of Units of either Trust at prices based on the value of Securities in
the Trust if the supply of Units of this series exceeds demand or for any other
business reason. The Sponsors, of course, do not in any way guarantee the
enforceability, marketability or price of any Securities in the Portfolio or of
the Units. However, the Sponsors will not repurchase Units in the secondary
market at a price below the net value of the Securities in the Trust.
The Sponsors may, of course, redeem any Units that they have purchased in
the secondary market to the extent that they determine that it is undesirable to
continue to hold such Units in their inventory. Factors which the Sponsors will
consider in making such a determination will include the number of Units of all
Series of unit trusts which they have in their inventory, the saleability of
such Units and their estimate of the time required to sell such Units and
general market conditions. For a description of certain consequences of such
redemption for the remaining Holders, see Redemption.
A Holder who wishes to dispose of his Units should inquire of his bank or
broker as to current market prices in order to determine if there exist
over-the-counter prices in excess of the redemption price and the repurchase
price (see Redemption).
REDEMPTION
Units may be redeemed and any Certificates cancelled by the Trustee of each
Trust at the office set forth on the back of this Prospectus upon tender of
Certificates and payment of any relevant tax without any other fee (Section
5.02). Certificates to be redeemed must be properly endorsed or accompanied by a
written instrument or instruments of transfer. Holders must sign exactly as
their name appears on the face of the Certificate with the signature guaranteed
by an eligible guarantor institution or in such other manner as may be
acceptable to the Trustee. In certain instances the Trustee may require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or certificates
of corporate authority.
On the seventh calendar day following such tender (or if the seventh
calendar day is not a business day on the first business day prior thereto), the
Holder will be entitled to receive in cash an amount per Unit equal to the
Redemption Price per Unit as determined as of the day of tender. The Trustee is
irrevocably authorized in its discretion, if the Sponsors do not elect to
repurchase any Unit tendered for redemption or if the Sponsors tender a Unit for
redemption, in lieu of redeeming such Units, to sell such Units in the
over-the-counter market for the
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<PAGE>
account of the tendering Holder at prices which will return to the Holder an
amount in cash, net after deducting brokerage commissions, transfer taxes and
other charges, equal to or in excess of the Redemption Price for such Units. The
Trustee will pay the net proceeds of any such sale to the Holder on the day he
would otherwise be entitled to receive payment of the redemption price (Section
5.02).
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available; all other
amounts paid on redemption will be withdrawn from the Capital Account (an
explanation of such Accounts is set forth in Administration of the
Fund--Accounts and Distributions). The Trustee is empowered to sell Securities
in order to make funds available for redemption (Section 5.02). The Securities
to be sold will be selected by the Trustee in accordance with procedures to be
specified by the Sponsors and on the basis of computer programs so as to
maintain, as closely as practicable, the proportionate relationship between
relative weightings of the Securities in the Portfolio and those of the stocks
in the applicable Index. Provision is made under the Indenture under which the
Sponsors may, but need not, specify minimum amounts in which blocks of
Securities are to be sold in order to obtain the best price for the Fund.
To the extent that Securities are sold, the size and the diversity of the
Fund will be reduced. Any such sales may be made at a time when Securities would
not otherwise be sold and may result in lower prices than might otherwise be
realized. In addition, because of the minimum amounts in which Securities may be
required to be sold, the proceeds of sale may exceed the amount required at the
time to redeem Units; such excess proceeds will be distributed to Holders unless
reinvested in substitute Securities in accordance with procedures to be
specified by the Sponsors (see Administration of the Fund--Portfolio
Supervision). The price received upon redemption may be more than or less than
the amount paid by the Holder depending on the value of the Securities in the
Portfolio at the time of redemption.
The right of redemption may be suspended and payment postponed for any
period, determined by the Securities and Exchange Commission ('SEC'), (1) during
which the New York Stock Exchange, Inc. is closed other than for customary
weekend and holiday closings, (2) during which the trading on that Exchange is
restricted or an emergency exists as a result of which disposal or evaluation of
the Securities is not reasonably practicable or (3) for such other periods as
the SEC may by order permit (Section 5.02).
COMPUTATION OF REDEMPTION PRICE PER UNIT
Redemption Price per Unit is computed for each Trust by the Trustee on each
June 30 and December 31 (or the last business day prior thereto), at the next
evaluation price (determined at the Evaluation Time set forth under Investment
Summary) after a receipt of a redemption request by a Holder and on any other
business day desired by the Trustee or requested by the Sponsors, by adding (a)
the aggregate value of the Securities in the Trust determined by the Trustee and
(b) cash on hand in the Trust including dividends receivable on stocks trading
exdividend (other than cash covering contracts to purchase Securities) and
deducting therefrom the sum of (x) taxes or other governmental charges against
the Fund not previously deducted, (y) accrued fees and expenses of the Trustee
(including legal and auditing expenses), the Licensor, the Sponsors and counsel,
and certain other expenses and (z) cash held for distribution and any other
amounts required to be distributed (by sale of Securities or otherwise) to
Holders of record as of a date prior to the evalution; and dividing the result
of such computation by the number of Units outstanding as of the date thereof
(Sections 4.01 and 5.01).
The aggregate value of the Securities shall be determined by the Trustee in
good faith in the following manner: if the Securities are listed on a national
securities exchange or the National Market System maintained by NASDAQ, such
evaluation shall generally be based on the closing sale price on such exchange
(unless the Trustee deems such price inappropriate as a basis for evaluation)
or, if there is no closing sale price on such exchange, at the mean between the
closing bid and asked prices. If the Securities are not so listed or, if so
listed and the principal market therefor is other than on such exchange, such
evaluation shall generally be made by the Trustee in good faith based on the
current bid price on the overthecounter market (unless the Trustee deems such
price inappropriate as a basis for evalution) or if no such current bid price is
available, (a) on the basis of current bid prices for comparable securities, (b)
by the Trustee's appraising the value of the Securities in good faith on the bid
side of the market or (c) by any combination thereof.
EXPENSES AND CHARGES
Licensor's Fee and Computer Tracking Expenses--The Licensor receives an
annual fee from each Trust of .02% of the average net asset value of the Trust
or, if greater, $10,000 (Section 3.12). This fee covers the license to the Fund
of the use of the trademarks and trade names 'S&P 500', 'Standard & Poors MidCap
400 Index' and
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other trademarks and trade names, as described above under 'Description of the
Fund -- The S&P 500 Index and the S&P MidCap Index'. In addition, the Fund will
pay approximately $45,000 per year for access to independent computer services
that track the S&P 500 Index and the S&P MidCap Index. Computer expenses will be
divided between the Trusts in proportion to their respective assets during the
relevant period.
Trustee's Annual Fee and Expenses--The Trustee (or Co-Trustees in the case
of Investors Bank & Trust Company and The First National Bank of Chicago)
receives for its services as Trustee and for reimbursement of expenses incurred
on behalf of the Trust, payable in monthly installments, the amount per 1,000
Units set forth under Investment Summary as Trustee's Annual Fee and Expenses,
which includes the estimated Sponsors' Portfolio Supervision Fee, Licensor's Fee
and Computer Tracking Expenses, estimated reimbursable bookkeeping or other
administrative expenses paid to the Sponsors and certain mailing and printing
expenses. There are no odd-lot premiums in buying Trust Units. There are no
management fees and there are relatively low ongoing expenses. Low costs are
essential for an index fund to approximate the performance of the index, which
has no expenses, and result in more of purchasers' money being invested. The
Trustee also receives benefits to the extent that it holds funds on deposit in
the various non-interest bearing accounts created under the Indenture. The
foregoing fees may be adjusted for inflation in accordance with the terms of the
Indenture without approval of Holders (Sections 4.02, 7.06 and 8.05).
Portfolio Supervision Fee--The Sponsors' fee, which is earned for portfolio
supervisory services, is an annual fee equal to the lesser of the cost to the
Sponsors of supplying the services and the maximum amount set forth under
Investment Summary per 1,000 Units of the Trust based on the average of largest
number of Units outstanding during each month of a calendar year. The Sponsors'
fee may exceed the actual costs of providing portfolio supervisory services for
this Fund, but at no time will the total amount they receive for portfolio
supervisory services rendered to all series of Equity Income Fund in any
calendar year exceed the aggregate cost to them of supplying these services in
that year (Section 7.06). In addition, the Sponsors may be reimbursed for
bookkeeping or other administrative services provided to each Trust in amounts
not exceeding their costs of providing these services (Sections 3.04, 7.06).
Other Charges--These include: (a) fees of the Trustee for extraordinary
services (Section 8.05), (b) expenses of the Trustee (including legal and
auditing expenses) and of counsel designated by the Sponsors (Sections 3.04,
3.10, 8.01[e], 8.03 and 8.05), (c) various governmental charges (Sections 3.03
and 8.01[h]), (d) expenses and costs of any action taken by the Trustee or the
Sponsors to protect the Trust and the rights and interests of the Holders
(Section 7.06 and 8.01[d]), (e) indemnification of the Trustee for any loss,
liabilities and expenses incurred in the administration of the Fund, without
gross negligence, bad faith or wilful misconduct on its part (Section 8.05), (f)
indemnification of the Sponsors for any loss, liabilities and expenses incurred
in acting as Sponsors of the Trust without gross negligence, bad faith or wilful
misconduct (Section 7.05[b]) and (g) expenditures incurred in contacting Holders
upon termination of the Trust (Section 9.02).
The Trustee's fee may be increased without approval of Holders by amounts
not exceeding proportionate increases under the classification 'All Services
Less Rent' in the Consumer Price Index published by the United States Department
of Labor (Sections 7.06 and 8.05).
The fees and expenses set forth herein are payable out of each Trust and
when paid by or owing to the Trustee are secured by a lien on the Trust (Section
8.05). If the balance in the Income Account is insufficient to provide for
amounts payable by the Trust, the Trustee has the power to sell Securities to
pay such amounts (Section 8.05).
ADMINISTRATION OF THE FUND
RECORDS
The Trustee of each Trust keeps records of the transactions of the Trust at
its unit trust office including names, addresses and holdings of all Holders, a
current list of the Securities and a copy of the applicable Indenture. Such
records are available to Holders for inspection at reasonable times during
business hours (Section 8.02 and 8.04).
ACCOUNTS AND DISTRIBUTIONS
Dividends payable to each Trust are credited by the Trustee to an Income
Account, as of the date on which the Trust is entitled to receive such dividends
as a holder of record of the Securities. Other receipts, including
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amounts received upon the sale of rights pursuant to Section 3.08 of the
Indenture, are credited to a Capital Account (Sections 3.01 and 3.02). Subject
to the Reinvestment Plan described below, any income distribution for each
Holder as of each Record Day will be made on the following Distribution Day or
shortly thereafter and shall consist of an amount equal to such Holder's pro
rata share of the distributable balance in the Income Account as of such Record
Date, after deducting estimated expenses, plus (in the case of the first such
distribution made in each calendar year) such Holder's pro rata share of the
distributable cash balance of the Capital Account computed as of the close of
business on such Record Day. Provision is made for cash generated in respect of
each capital gains transaction to be reinvested in 500 Index Stocks or MidCap
Index Stocks (as the case may be) on a timely basis and for Securities to be
sold to make cash available annually to permit distribution of net capital gains
and net short-term capital gains to Holders. The first distribution for persons
who purchase Units between a Record Day and a Distribution Day will be made on
the second Distribution Day following their purchase of Units. A Reserve Account
may be created by the Trustee by withdrawing from the Income Account, from time
to time, amounts deemed necessary to establish a reserve for any material
amounts that may be payable out of the Fund (Section 3.03). Funds held by the
Trustee in the various accounts created under the Indentures do not bear
interest (Section 8.01).
REINVESTMENT PLAN
Monthly income distributions and annual distributions of any net capital
gains in respect of the Units may be reinvested by participating in the Fund's
reinvestment plan (the 'Reinvestment Plan'). A Holder of either Trust (including
any Holder which is a broker or nominee of a bank or other financial
institution) may indicate to the Trustee, by filing the written notice of
election accompanying this Prospectus or by notice to the Holder's account
executive or sales representative, that he wishes such distributions to be
automatically invested in additional Units (or fractions thereof) of the Trust.
The Holder's completed notice of election to participate in the Reinvestment
Plan must be received by the Trustee at least ten days prior to the Record Day
applicable to any distribution in order for the Reinvestment Plan to be in
effect as to such distribution. Holders of Units held in 'street name' by their
broker or dealer should contact their account executive or sales representative
to determine whether or not participation in the Reinvestment Plan through that
broker or dealer is available. Holders of Units participating in the
Reinvestment Plan through their broker or dealer will receive confirmation of
their reinvestments in their regular account statements or on a quarterly basis.
Until such time as additional Units cease to be issued by a Trust (see Fund
Structure), Reinvestment Plan distributions will be reinvested in such
additional Units. After the Fund has ceased to issue new Units, Reinvestment
Plan distributions may be reinvested (subject to SEC approval) in new units of
subsequent funds of the Index Series, if any are offered. If no such new units
of subsequent funds are available for reinvestment, distributions will be
reinvested in Units of the Trust or units of such subsequent funds, which are
available for sale in the secondary market maintained by the Sponsors (see
Market for Units). If Units are unavailable in the secondary market,
distributions which would otherwise have been reinvested shall be paid to the
Holder on the applicable Distribution Day.
Purchases made pursuant to the Reinvestment Plan will be made without sales
charge at net asset value on the close of business on the Distribution Day to
take into account that purchases for the Reinvestment Plan result in less
selling expense. Under the Reinvestment Plan, each Trust will pay the
distributions to the Trustee which in turn will purchase for the Holder full and
fractional Units of the Trust (or units of such subsequent funds) at the price
and time indicated above, will add the Units (or such subsequent fund units) to
the Holder's account, and will send the Holder an account statement reflecting
the reinvestment. Reinvesting compounds total return performance.
The Trustee will issue Certificates for whole Units purchased through the
Reinvestment Plan only if the Holder so requests. Certificates will not be
issued for fractional units. The Trustee will credit each Holder's account with
the number of Units purchased with such Holder's reinvested distribution. Each
Holder receives account statements both annually and after each Reinvestment
Plan transaction to provide the Holder with a record of the total number of
Units in his account. This relieves the Holder of responsibility for safekeeping
of Certificates and, should he sell his Units, eliminates the need to deliver
certificates. The Holder may at any time request the Trustee (at the Trust's
cost) to issue Certificates for full Units.
During such time as Reinvestment Plan distributions are being reinvested in
new Units of a Trust, in the event an issuer of a Security has a shareholder
dividend reinvestment plan, a stock purchase plan or a similar plan under which
its shareholders may automatically reinvest their dividends or invest optional
cash payments in
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additional shares of the issuer's common stock without brokerage commission or
service charge or otherwise on a basis favorable to the shareholder in the
opinion of the Sponsors, the Trust (as a shareholder of such issuer) upon the
direction of the Sponsors may participate in such plans to the extent
practicable given the other restrictions on the purchase of additional
Securities even if such participation temporarily results in the proportionate
relationship with the relevant Index not being maintained. In such event the
Sponsors will deposit cash (or a letter of credit) with the Trustee together
with instructions to invest such cash in accordance with such plans in lieu of
depositing Index Stocks.
Certain of the shareholder dividend reinvestment, stock purchase or similar
plans maintained by issuers of the Securities in the Trusts offer shares
pursuant to such plans at a discount from market value. The Trustees are
required by applicable provisions of the Federal Internal Revenue Code to
distribute pro rata to all Holders (i.e., not just to those Holders
participating in the Reinvestment Program) the income attributable to such
discounts.
PORTFOLIO SUPERVISION
The Sponsors may direct the Trustee of either Trust to dispose of
Securities and either to acquire other Securities through the use of proceeds of
such disposition in order to make such changes in the Portfolio or to distribute
the proceeds of such disposition to Holders (i) as may be necessary to reflect
any additions to or deletions from the applicable Index, (ii) as may be
necessary to establish a closer correlation between the weightings of the
Securities in the Portfolio and their weightings in the applicable Index, (iii)
as may be required for purposes of distributing to Holders at least annually
their pro rata share of net realized capital gains or as the Sponsors may
otherwise determine or (iv) as may be required to maintain the qualification of
the Trust as a regulated investment company for Federal income tax purposes or
by applicable law (Section 3.08). The Sponsors may direct the Trustee of either
Trust to sell any property (other than cash) or any Securities other than Index
Stocks received by the Trust as a result of any recapitalization,
reorganization, merger, payment of a dividend or other similar transaction
entered into by any of the companies included in the applicable Index and may
direct the Trustee to invest the proceeds of any such sale in additional Index
Stocks. In accordance with each Indenture, and with procedures to be specified
by the Sponsors or provided therein and on the basis of computer programs, the
Trustee will purchase and sell Securities in a manner that maintains, to the
extent practicable, the same proportionate relationship among the Securities in
the Portfolio as exists among the stocks in the relevant Index (Sections 3.08
and 3.11).
Failure to declare or pay dividends, institution of materially adverse
legal proceedings, defaults materially and adversely affecting future
declaration or payment of dividends, or the occurrence of other materially
adverse credit factors will not be a basis for the disposition of a Security
unless such Security is eliminated from the applicable Index.
Each Trustee will follow a policy that it will place securities
transactions with a broker or dealer only if it expects to obtain the most
favorable prices and executions of orders. Transactions in securities of the
nature held in the Fund are generally made in brokerage transactions (as
distinguished from principal transactions--see Public Sale of
Units--Underwriters' and Sponsors' Profits) and the Sponsors or any of their
affiliates may act as brokers therein if the Trustee expects thereby to obtain
the most favorable prices and execution. The furnishing of statistical and
research information to the Trustees by any of the securities dealers through
which transactions are executed will not be considered in placing securities
transactions.
REPORTS TO HOLDERS
The Trustees furnish Holders with each distribution a statement of the
amount of income and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per Unit. Within a
reasonable period of time after the end of each calendar year (normally prior to
January 31 of the succeeding year), the Trustee of each Trust will furnish to
each person who at any time during the calendar year was a Holder of record a
statement, in reasonable detail, (i) summarizing transactions for such year in
the Income, Capital and Reserve Accounts, including a list of Securities sold
and purchased during such year, (ii) stating the Redemption Price based upon the
computation thereof made on the 31st day of December of such year, (iii)
specifying the amounts distributed during such year to Holders with respect to
the Income Account and the Capital Gains Account and (iv) if applicable,
summarizing transactions for such year with respect to such person's
participation in the Reinvestment Plan. The accounts of each Trust shall be
audited not less frequently than annually by independent certified public
accountants designated by the Sponsors, and the report of such accountants shall
be furnished by the Trustee to Holders upon request (Section 8.01[e]).
15
<PAGE>
CERTIFICATES
Certain of the Sponsors may collect additional charges for registering and
shipping Certificates to purchasers of Units. These Certificates are
transferable or interchangeable upon presentation at the office of the relevant
Trustee as set forth on the back of this Prospectus, properly endorsed or
accompanied by an instrument of transfer satisfactory to the Trustee, together
with a payment of $2.00 if required by the Trustee (or such other amount as may
be specified by the Trustee and approved by the Sponsors) for each new
Certificate and any sums payable for taxes or other governmental charges imposed
upon such transaction (Section 6.01). Mutilated, destroyed, stolen or lost
Certificates will be replaced upon delivery of satisfactory indemnity and
payment of expenses incurred (Section 6.02).
AMENDMENT AND TERMINATION
Each Indenture may be amended by the Trustee and the Sponsors without the
consent of any of the Holders (a) to cure any ambiguity or to correct or
supplement any provision thereof which may be defective or inconsistent, (b) to
change any provision thereof as may be required by the SEC or any successor
governmental agency, (c) to add or change any provision thereof as may be
necessary or advisable for continuing qualification of the Trust as a regulated
investment company under the Internal Revenue Code or (d) to make such other
provisions as shall not materially adversely affect the interest of the Holders.
Each Indenture may also be amended in any respect by the Sponsors and the
Trustee, or any of the provisions thereof may be waived, with the consent of the
Holders of 51% of the Units then outstanding, provided that no such amendment or
waiver will reduce the interest in the Trust of any Holder without the consent
of such Holder or reduce the percentage of Units required to consent to any such
amendment or waiver without the consent of all Holders. The Trustee must
promptly notify Holders of the substance of any such amendment (Section 10.01).
The Fund will be terminated and liquidated on or before the Mandatory
Termination Date set forth under Investment Summary. Either Indenture may be
terminated if the value of the Trust is less than 40% of its value on the
Initial Date of Deposit or if the number of outstanding Units is less than 40%
of the number outstanding on the Initial Date of Deposit (see Investment
Summary), and may be terminated at any time by Holders holding 51% of the
outstanding Units (Sections 8.01[g] and 9.01). In addition, either Indenture may
be terminated if the applicable Index ceases to be compiled or made available.
Written notice of termination of the Indenture must be given to all Holders
(Section 9.01). Within a reasonable period of time after such termination, the
Trustee must sell all of the Securities then held and distribute to Holders,
upon surrender for cancellation of their Certificates, and after deductions of
accrued and unpaid fees, taxes and governmental and other charges, the Holders'
interest in the Income and Capital Accounts (Section 9.01). Such distributions
normally will be made by mailing a check in the amount of each Holder's interest
in such accounts, to the address of such Holder appearing on the record books of
the Trustee. Due to market conditions the amount realized by a Holder on such
distributions may be more or less than the amount paid by such Holder for his
Units.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY
THE TRUSTEES--A Trustee or any successor may resign upon notice to the
Sponsors. The Trustee of either Trust may be removed upon the direction of the
Holders of 51% of the Units of the Trust at any time or by the Sponsors without
the consent of any of the Holders if the Trustee becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities. Such
resignation or removal shall become effective upon the acceptance of appointment
by the successor. In case of such resignation or removal the Sponsors are to use
their best efforts to appoint a successor promptly and if upon resignation of a
Trustee no successor has accepted appointment within thirty days after
notification, the Trustee may apply to a court of competent jurisdiction for the
appointment of a successor (Section 8.06). The Trustees shall be under no
liability for any action taken in good faith in reliance on prima facie properly
executed documents or for the disposition of monies or Securities, nor shall
they be liable or responsible in any way for depreciation or loss incurred by
reason of the sale of any Securities. This provision, however, shall not protect
a Trustee in cases of wilful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties. In the event of the failure of
the Sponsors to act, the Trustee of the Trust may act under the Indenture and
shall not be liable for any such action taken in good faith. The Trustees shall
not be personally liable for any taxes or other governmental charges imposed
upon or in respect of the Securities or upon the interest thereon. In addition,
the Indentures contains other customary provisions limiting the liability of the
Trustees (Sections 3.04, 3.08, 8.01 and 8.05).
16
<PAGE>
THE SPONSORS--Any Sponsor may resign if one remaining Sponsor maintains a
net worth of $2,000,000 and is agreeable to such resignation. A new Sponsor may
be appointed for either Trust by the remaining Sponsors and the Trustee to
assume the duties of the resigning Sponsor (Section 7.04). If there is only one
Sponsor of a Trust and it shall fail to perform its duties or becomes incapable
of acting or becomes bankrupt or its affairs are taken over by public
authorities, then the Trustee may (a) appoint a successor Sponsor at rates of
compensation deemed by the Trustee to be reasonable and as may not exceed
amounts prescribed by the SEC, or (b) terminate the Indenture and liquidate the
Fund or (c) continue to act as Trustee without terminating the Indenture
(Section 8.01[f]). The Agent for the Sponsors has been appointed by the other
Sponsors for purposes of taking action under each Indenture (Section 7.01). If
the Sponsors are unable to agree with respect to action to be taken jointly by
them under an Indenture and they cannot agree as to which Sponsors shall
continue to act as Sponsors, then Merrill Lynch, Pierce, Fenner & Smith
Incorporated shall continue to act as sole Sponsor (Section 7.02[b]). If one of
the Sponsors fails to perform its duties or becomes incapable of acting or
becomes bankrupt or its affairs are taken over by public authorities, then such
Sponsor is automatically discharged and the other Sponsors shall act as Sponsor
(Section 7.02[a]). The Sponsors shall be under no liability to the Fund or to
the Holders of Units for taking any action or for refraining from taking any
action in good faith or for errors in judgment and shall not be liable or
responsible in any way for depreciation or loss incurred by reason of the sale
of any Securities. This provision, however, shall not protect the Sponsors in
cases of wilful misfeasance, bad faith, gross negligence or reckless disregard
of their obligations and duties (Section 7.05). The Sponsors and their
successors are jointly and severally liable under the Indentures. A Sponsor may
transfer all or substantially all of its assets to a corporation or partnership
which carries on its business and duly assumes all of its obligations under the
Indentures and in such event it shall be relieved of all further liability under
the Indentures (Section 7.03).
MISCELLANEOUS
TRUSTEE
The Trustee of each Trust is named on the back cover page of this
Prospectus. The Chase Manhattan Bank N.A., is a national banking association
with its Unit Trust Department at 1 Chase Manhattan Plaza--3B, New York, New
York 10081 (which is subject to supervision by the Comptroller of the Currency,
the Federal Deposit Insurance Corporation ('FDIC') and the Board of Governors of
the Federal Reserve System (the 'Federal Reserve')). Investors Bank & Trust
Company, a Massachusetts trust company with its unit investment trust servicing
group at One Lincoln Plaza, Boston, Massachusetts 02111 (which is subject to
supervision by the Massachusetts Commissioner of Banks, the FDIC and the Federal
Reserve) acts as a Co-Trustee with The First National Bank of Chicago, a
national banking association with its corporate trust office at One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126 (which is subject to
supervision by the Comptroller of the Currency, the FDIC and the Federal
Reserve).
LEGAL OPINION
The legality of the Units has been passed upon by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017, as special counsel for the
Sponsors. Bingham, Dana & Gould, 150 Federal Street, Boston, Massachusetts
02110, act as counsel for The First National Bank of Chicago and Investors Bank
& Trust Company, as Co-Trustees.
AUDITORS
The Statements of Condition, including the Portfolios of the Fund, included
herein have been audited by Deloitte & Touche, independent accountants, as
stated in their opinion appearing herein and have been so included in reliance
upon that opinion given on the authority of that firm as experts in accounting
and auditing.
SPONSORS
Each Sponsor is a Delaware corporation and is engaged in the underwriting,
securities and commodities brokerage business and is a member of the New York
Stock Exchange, Inc., other major securities exchanges and commodity exchanges,
and the National Association of Securities Dealers, Inc. Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Merrill Lynch Asset Management, a Delaware
corporation, each of which is a subsidiary of Merrill Lynch & Co., Inc., are
engaged in the investment advisory business. Smith Barney Shearson Inc., an
investment banking and securities broker-dealer firm, is an indirect
wholly-owned subsidiary of The Travelers Inc. Prudential Securities
Incorporated, a wholly-owned subsidiary of Prudential Securities Group Inc. and
an
17
<PAGE>
indirectly wholly-owned subsidiary of the Prudential Insurance Company of
America, is engaged in the investment advisory business. Dean Witter Reynolds
Inc., a principal operating subsidiary of Dean Witter, Discover & Co. is engaged
in the investment advisory business. PaineWebber Incorporated is engaged in the
investment advisory business and is a wholly-owned subsidiary of PaineWebber
Group Inc. Each Sponsor has acted as principal underwriter and managing
underwriter of other investment companies. The Sponsors, in addition to
participating as members of various selling groups or as agents of other
investment companies, execute orders on behalf of investment companies for the
purchase and sale of securities of these companies and sell securities to these
companies in their capacities as brokers or dealers in securities.
Each Sponsor (or a predecessor) has acted as Sponsor of various series of
Defined Asset Funds. A subsidiary of Merrill Lynch, Pierce, Fenner & Smith
Incorporated succeeded in 1970 to the business of Goodbody & Co., which had been
a co-Sponsor of Defined Asset Funds since 1964. That subsidiary resigned as
Sponsor of each of the Goodbody series in 1971. Merrill Lynch, Pierce, Fenner &
Smith Incorporated has been co-Sponsor and the Agent for the Sponsors of each
series of Defined Asset Funds created since 1971. Shearson Lehman Brothers Inc.
('Shearson') and certain of its predecessors were underwriters beginning in 1962
and co-Sponsors from 1965 to 1967 and from 1980 to 1993 of various Defined Asset
Funds. As a result of the acquisition of certain of Shearson's assets by Smith
Barney Harris Upham & Co. Incorporated and Primerica Corporation (now The
Travelers Inc.), as described above, Smith Barney Shearson Inc. now serves as
co-Sponsor of various Defined Asset Funds. Prudential Securities Incorporated
and its predecessors have been underwriters of Defined Asset Funds since 1961
and co-Sponsors since 1964, in which year its predecessor became successor
co-Sponsor to the original Sponsor. Dean Witter Reynolds Inc. and its
predecessors have been underwriters of various Defined Asset Funds since 1964
and co-Sponsors since 1974. PaineWebber Incorporated and its predecessor have
co-Sponsored certain Defined Asset Funds since 1983.
The Sponsors have maintained secondary markets in Defined Asset Funds for
over 20 years. For decades informed investors have purchased unit investment
trusts for dependability and professional selection of investments. Defined
Asset Funds offers an array of simple and convenient investment choices, suited
to fit a wide variety of personal financial goals--a buy and hold strategy for
capital accumulation, such as for children's education or a nest egg for
retirement, or attractive, regular current income consistent with relative
protection of capital. There are Defined Funds to meet the needs of just about
any investor. Unit investment trusts are particularly suited for the many
investors who prefer to seek long-term profits by purchasing sound investments
and holding them, rather than through active trading. Few individuals have the
knowledge, resources, capital or time to buy and hold a diversified portfolio on
their own; it would generally take a considerable sum of money to obtain the
breadth and diversity offered by Defined Funds. Sometimes it takes a combination
of Defined Funds to plan for your objectives.
One of the most important decisions an investor faces may be how to
allocate his investments among asset classes. Diversification among different
kinds of investments can balance the risks and rewards of each one. Most
investment experts recommend stocks for long-term capital growth. Long-term
corporate bonds offer relatively high interest income. By purchasing both
defined equity and defined bond funds, investors can receive attractive current
income, as well as growth potential, offering some protection against inflation.
The following chart shows the average annual compounded rate of return of
selected asset classes over the year and 20-year periods ending December 31,
1993, compared to the rate of inflation over the same periods. Of course, this
chart represents past performance of these investment categories and there is no
guarantee of future results either of these categories or of Defined Funds.
Defined Funds also have sales charges and expenses, which are not reflected in
this chart.
18
<PAGE>
Stocks (S&P 500)
20 yr 12.76%
10 yr 14.94%
Small-company stocks
20 yr 18.82%
10 yr 9.96%
Long-term corporate bonds
20 yr 10.16%
10 yr 14.00%
U.S. Treasury bills (short-term)
20 yr 7.49%
10 yr 6.35%
Consumer Price Index
20 yr 5.92%
10 yr 3.73%
0 2 4 6 8 10
12 14 16 18
20%
Source: Ibbotson Associates (Chicago).
Used with permission. All rights reserved.
Instead of having to select individual securities on their own, purchasers
of Defined Funds benefit from the expertise of Defined Asset Funds' experienced
buyers and research analysts. In addition, they gain the advantage of
diversification by investing in units of a Defined Fund holding securities of
several different issuers. Such diversification reduces risk, but does not
eliminate it. While the portfolio of a managed fund, such as a mutual fund,
continually changes, defined bond funds offer a defined portfolio and a schedule
of income distributions identified in the prospectus. Investors know, generally,
when they buy, the issuers, maturities, call dates and ratings of the securities
in the portfolio. Of course, the portfolio may change somewhat over time as
additional securities are deposited, as securities mature or are called or
redeemed or as they are sold to meet redemptions and in certain other limited
circumstances. Investors buy bonds for dependability--they know what they can
expect to earn and that principal is distributed as the bonds mature. Investors
also know at the time of purchase their estimated income and current and
long-term returns, subject to credit and market risks and to changes in the
portfolio or the fund's expenses.
Defined Asset Funds offers a variety of fund types. The tax exemption of
municipal securities, which makes them attractive to high-bracket taxpayers, is
offered by Defined Municipal Investment Trust Funds. Municipal Defined Funds
offer a simple and convenient way for investors to earn monthly income free from
regular Federal income tax. Defined Municipal Investment Trust Funds have
provided investors with tax-free income for more than 30 years. Defined
Corporate Income Funds, with higher current returns than municipal or government
funds, are suitable for Individual Retirement Accounts and other tax-advantaged
accounts and provide monthly income. Defined Government Securities Income Funds
provide a way to participate in markets for U.S. government securities while
earning an attractive current return. Defined International Bond Funds, invested
in bonds payable in foreign currencies, offer the potential to profit from
changes in currency values and possibly from interest rates higher than paid on
comparable US bonds, but investors incur a higher risk for these potentially
greater returns. Historically, stocks have offered growth of capital, and thus
some protection against inflation, over the long term. Defined Equity Income
Funds offer participation in the stock market, providing current income as well
as the possibility of capital appreciation. The S&P Index Trusts offer a
convenient and inexpensive way to participate in broad market movements. Concept
Series seek to capitalize on selected anticipated economic, political or
business trends. Utility Stock Series, consisting of stocks of issuers with
established reputations for regular cash dividends, seek to benefit from
dividend increases. Select Ten Portfolios seek total return by investing for one
year in the the ten highest yielding stocks on a designated stock index.
19
<PAGE>
Defined
Asset FundsSM
SPONSORS: EQUITY INCOME FUND
Merrill Lynch, INDEX SERIES
Pierce, Fenner & Smith Inc. S&P 500 Trust 2
Unit Investment Trusts S&P MidCap Trust
P.O. Box 9051 Unit Investment Trusts
Princeton, N.J. 08543-9051 PROSPECTUS
(609) 282-8500 This Prospectus does not contain all of
Smith Barney Shearson Inc. the information set forth in the
Unit Trust Department registration statements and exhibits
Two World Trade Center relating thereto, which the Fund has
101st Floor filed with the Securities and Exchange
New York, NY 10048 Commission, Washington, D.C. under the
(212) 298-7009 Securities Act of 1933 and the
PaineWebber Incorporated Investment Company Act of 1940, and to
1200 Harbor Blvd. which reference is hereby made.
Weehawken, N.J. 07087 No person is authorized to give any
(201) 902-3000 information or to make any
Prudential Securities Incorporated representations with respect to this
One Seaport Plaza investment company not contained in
199 Water Street this Prospectus; and any information or
New York, N.Y. 10292 representation not contained herein
(212) 776-1000 must not be relied upon as having been
Dean Witter Reynolds Inc. authorized. This Prospectus does not
Two World Trade Center constitute an offer to sell, or a
69th Floor solicitation of an offer to buy,
New York, NY 10048 securities in any state to any person
(212) 392-2222 to whom it is not lawful to make such
INDEPENDENT ACCOUNTANTS: offer in such state.
Deloitte & Touche
One World Trade Center
New York, N.Y. 10048
TRUSTEE FOR THE S&P 500 TRUST 2:
The Chase Manhattan Bank, N.A.
Unit Trust Department
Box 2051
New York, NY 10081
1-800-323-1508
CO-TRUSTEES FOR THE S&P MIDCAP
TRUST:
The First National Bank of Chicago
Investors Bank & Trust Company
P.O. Box 1537
Boston, MA 02205-1537
1-800-338-6019
14124--4/94
